Monday, March 24, 2014

Asymmetric Information: Caveat Venditor?

Most people would say that if the buyer knows of a defect that makes the asking price (in effect) fraudulent, then he should disclose that information.  Of course if the defect if obvious, or should be obvious to a competent observer, that's a different story.

But suppose it's a negative defect, or in other words a huge bonus value, and it's the buyer who knows?

For example, was the buyer obliged to reveal that this object was worth at least 100 times the asking price? 

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Do you have suggestions on where we could find more examples of this phenomenon?