In 1970, economist George Akerlof described a strange market problem using something as simple as a used car. The buyer cannot perfectly observe quality. The seller knows more. So buyers become unwilling to pay what a good car is actually worth. That lower price makes owners of good cars less willing to sell. The market gradually attracts more low quality cars. The surprising part Information can change the quality of what gets traded. Markets aren’t only mechanisms for discovering prices. They can also change the composition of participants and assets inside the market. That idea appears everywhere in finance. When good information is expensive, bad information can become disproportionately influential not because it is more accurate, but because it is cheaper and easier to produce. Price discovery is therefore not simply information → price Sometimes it is information → behavior → participation → available supply → price. The market isn’t just processing information. It is changing because of who has the information. #Economics# #MarketStructure# #Trading# #Finance#