Nobel Laureate in Economic Sciences 2001
Professor of Economics, Department of Economics, University of California, Berkeley, USA
Co-reason for the prize:
for their analyses of markets with asymmetric information
Professional Profile: George Akerlof, is professor of Economics at the University of California, Berkeley since 1980. Among numerous other employments he has been Senior Fellow of The Brookings Institution and Professor with respect to Money and Banking at the London School of Economics.
His research often draws from other disciplines, including psychology, anthropology, and sociology, and he has played an important role in the development of behavioural economics. In 2001 he was named co-winner of the Nobel Prize in economic sciences together with A. Michael Spence and Joseph Stiglitz.
The Nobel Committee cited Akerlof’s 1970 paper, “The Market for ‘Lemons,’” which for the first time described the role of asymmetric information in causing market perversity. A vicious circle in used car markets illustrates the phenomenon. Potential sellers of used cars, with their superior information, withhold good cars from the market; buyers react by reducing the price they are willing to pay; and in turn sellers further reduce the quality of cars put up for sale.
Professor Akerlof has also pioneered in the application of sociology and psychology to the workings of the macro-economy, and recently published, with Robert Shiller, Animal Spirits: How Human Psychology Drives the Economy and Why It Matters for Global Capitalism.
Among his numerous assignments Professor Akerlof has been Senior Adviser at the Brookings Panel on Economic Activity, Member of the Economic Growth Program of the Canadian Institute for Advanced Research, Fellow of the Institute for Policy Reform, and Research Associate of the National Bureau of Economic Research.
Professor Akerlof publishes frequently in economics journals such as the American Economic Review and the Quarterly Journal of Economics.