George A. Akerlof
George A. Akerlof is a New Keynesian economist, writer, and Professor Emeritus at the University of California, Berkeley. With A. Michael Spence and Joseph E. Stiglitz, he earned the 2001 Nobel Prize in economics for their examinations of information asymmetry.
Akerlof is the creator of Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism, and Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being.
Early Life and Education
George A. Akerlof was brought into the world on June 17, 1940, in New Haven, CT. He earned a four year certification from Yale University and a Ph.D. at the Massachusetts Institute of Technology in 1966. He joined the staff at the University of California, Berkeley, as an economics teacher, where he remains today.
The Market for Lemons
George A. Akerlof presented his theory of markets under asymmetric data in his paper, The Market for Lemons, Quality Uncertainty and the Market Mechanism, distributed in 1970.
Asymmetric data exists when one party in an economic transaction has more data than the other. The Market for Lemons refers to the case of a trade-in vehicle purchase where the seller has more data than the buyer in a market of both great cars and "lemons."
Akerlof claims that when a buyer can't recognize the top notch vehicle and the "lemon," the buyer becomes reluctant to pay the genuine value of the better vehicle offered available to be purchased. Due to limited data, the buyer expects that the better vehicle is likewise of lower quality and the buyer will thus offer a lower price for even an excellent vehicle.
This makes all of the vehicle prices fall, and makes a market of just lower-priced "lemons." This unreasonably powers sellers of new or top notch cars to demonstrate their product's unwavering quality, frequently through policies like guarantees.
George A. Akerlof shared the 2001 Nobel Prize in economics with A. Michael Spence and Joseph E. Stiglitz for their investigations of markets with asymmetric data.
Akerlof is explicitly attributed with his contribution to the study of markets where sellers of products have more data than buyers about product quality and showed that bad quality products might squeeze out top notch products in such markets and that prices of excellent products might endure accordingly.
The Bottom Line
A prestigious economist and educator, George A. Akerlof is known for his study of asymmetric data in markets. Granted the 2001 Nobel Prize, he is Professor Emeritus at the University of California, Berkeley.
Features
- He is eminent for his 1970 paper, The Market for Lemons, Quality Uncertainty and the Market Mechanism.
- He is married to the former chair of the Federal Reserve, Janet Yellen.
- Akerlof received the Nobel Prize in economics for his theory of markets under asymmetric data.
- George Akerlof is a New Keynesian economist and Professor Emeritus at UC Berkeley.
FAQ
What Is the Fair Wage-Effort Hypothesis?
In 1990, George A. Akerlof and his better half, Janet Yellen, former chair of the Federal Reserve, developed the theory, "the fair wage-exertion hypothesis." That's what yellen and Akerlof contend "laborers relatively pull out exertion as their genuine wage falls short of their fair wage." Such behavior causes unemployment and is additionally reliable with noticed cross-segment wage differentials and unemployment designs.
What Is Reproductive Technology Shock?
In 1996, Akerlof portrayed a phenomenon that he named "reproductive technology shock." He contended that the new innovations that had assisted with producing the late 20th century sexual revolution, like modern contraception and legal early termination, had not just failed to stifle the incidence of outside of a stable family structure childbearing, yet additionally had attempted to increase it.
What Is Identity Economics?
In his 2011 book, Identity Economics, George A. Akerlof catches that individuals pursue economic decisions in light of both monetary incentives and their identity and that individuals stay away from activities that conflict with their concept of self.
