Market for Lemons

"The Market for 'Lemons': Quality Uncertainty and the Market Mechanism". Quarterly Journal of Economics (The MIT Press) is a paper by Akerlof, George A. (1970).
http://hydrogen.its.ucdavis.edu/eec/education/EEC-classes/eeclimate/class-readings/akerlof-the%20market%20for%20lemons.pdf

In this article Akerlof demonstrates a variation of Gresham's law in the operation of the 'principle of lemons. (Lemon being a bad automobile). This principle holds that in a 'seller's market', buyers have no way of ascertaining a poor purchase ("Lemons") from a good one. ("Cherries"). Prices naturally settle to the 'fair price' of a poor purchase. Akerlof argues that dishonest sellers dominate the market, as no buyers are willing to risk paying higher prices in the hope of getting a good purchase. (so purchases are influenced by damage limitation). Akerlof applies his lemon principle to a variety of applications including medical insurance, employment of minorities, economically developing countries.

Mitigating factors may arise out of what Akerlof calls "Counteracting Institutions" ie 1) Guarantees, 2) Brand Name Goods. 3) Licensing Practices (ie award of a BA degree)

"There are many markets in which buyers use some market statistic to judge the quality of prospective purchases".

"The Costs of Dishonesty
The Lemons model can be used to make some comments on the costs of dishonesty. Consider a market in which goods are sold honestly or dishonestly; quality may be represented, or it may be misrepresented. The purchaser's problem, of course, is to identify
quality".

"But the difficulty of distinguishing good quality from bad is inherent in the business world; this may indeed explain many economic institutions and may in fact be one of the more important aspects of uncertainty".

Conclusion: Akerlof's Lemon principle may have some currency in the changing English Higher Education landscape. If we assume that the increased costs of undertaking graduate study, do not offer a guarantees of obtaining a degree, it merely offers the student the chance to compete to obtain a degree. Brand Name is also problematic as the 'market value' of a student's degree is determined before a student embarks on a study programme. It is unlikely that the market value of a degree is likely to vary, either up or down over the course of three years (The period on study). University brand names seem to be quite static entities built over centuries or decades, not withstanding administrative crises. Licensing practices, which loosely interpreted might mean explicit and valued content of the degree programme might be the only avenue. Consequently, degree programmes will have to reduce the ambiguity of their content, as prospective students are less likely to pay cherry amounts for an ambiguous product which might just turn out to be a lemon.