Lemon Dungeoneers

In 1970, economist George Akerlof released a journal article about the used car market. In it, he drew the distinction between cherries (good cars) and lemons (faulty cars), and predicted how those selling cherries would be driven out of the market (and conversely how the proportion of lemons would increase).

There is often comment by World of Warcraft players how they would, at times, join a sub-par pickup group (PuG) and resultingly endure an excruciating dungeon run. The 'market' for dungeoneering 'labour' may well degenerate similarly, for the fellow dungeoneers likely do not know how skilled each other is.

The thing about asymmetric information
In the lemon market as described by Akerlof, it is asymmetric information that drives cherries out of the market. In such a market, the buyer does not know much about the quality of the seller's product so as to form a price. In the used car market example, the used car has many parts hidden away from view, so the buyer cannot completely know whether the car is free from defects. As a result, they make a best guess that the car is of 'average' quality and so will be willing to pay an 'average' price.

Of course, this means that a seller of a cherry cannot command a higher price for their quality car, and so they exit the market. As more and more cherry sellers refuse to sell their cars, the average quality of the cars on the market drops, and with it the average price. This continues in a vicious cycle until only lemons remain in the market.

Asymmetric information and dungeoneers
Similarly to the used car market scenario, the individual dungeoneers of a PuG market are simultaneous buyers and sellers of each other's dungeoneering labour and do not know much about each other's skill. As a result, they each assume that any given random individual is of average skill. This would turn away some highly skilled (cherry) individuals, as they are not willing to spend their time in and risk enduring a possible bad dungeon run. The average skill of individuals in the market decreases and with it the average expectation of skill. More cherry dungeoneers would leave in a vicious cycle until only lemon dungeoneers would remain.

To PuG or not to PuG? That is the question.

Implications
In response to the outflow of cherry dungeoneers, the following may happen:

• Individuals become more likely to consider a premade dungeon group.
• Individuals become more likely to cease running dungeons altogether, and do other things such as PvP, daily questing and even returning to real life for activities.
• Blizzard tunes future and present instances easier, so as to stem the outflow. However, depending on factors such as whether players dungeoneer for the challenge, they may end up repeating it ad infinitum.

Mitigating factors
Despite the apparent smilarities between the PuG market and the hypothetical lemon market, factors exist that, to some extent, distinguish:

• Dungeon rewards, in the form of points and coin. This factor is at its most prominent at the release of new content, where players can use Valor Points to buy gear of current level. This would attract back the higher-skilled players running raids. However, as more and more raiders get all the gear they can from the Valor Point vendor, more and more cherry dungeoneers stop running 5-man dungeons; further out from the content patch, the PuG market more resembles a lemon market.
• The participation of incomplete premade groups in the PuG market. The skill of such group members would be higher enough above average to warrant premaking the group, and the quality of dungeon groups in general would be higher. However, this would not be a fully random group and, depending on the reader's individual definition of 'PuG market', partially premade groups may be excluded from consideration.

Bibliography

• Akerlof, George (1970), 'The Market for 'Lemons': Quality Uncertainty and the Market Mechanism', Quarterly Journal of Economics, vol. 84, no. 3, pp. 488-500.