George Akerlof is one of the most original economists of our time.His approach to economic theory is always different from the scope of the freedom of the orthodox economic theory, interdisciplinary, moderate and creative use of mathematics.
He was born June 17, 1940 in New Haven, Conn. Degree of Doctor of Philosophy was at the Massachusetts Institute of Technology in 1966He was a professor of the Indian Statistical Institute and London School of Economics and Political Science. In 1973 he was one of the leading members of the Committee of Economic Advisers under President Nixon. In 1977-78. I worked at the Federal Reserve System. Since 1980 - Professor, University of California at Berkeley. The most famous article G. Akerlof, which brought him worldwide fame and a Nobel Prize in 2001 -. Lemons Market (1970) . I do not think that the subject of this article is to market citrus - lemon in America is called a used car. Since this work used car is a model example of the presence of asymmetric information in the market. Consider the theory of John. Akerlof little more detail.
Consider first market in which buyers and sellers have the same information about the product : they both know that the product is heterogeneous in quality, knowwhat qualitative characteristics and in what amounts are found in the total mass of the goods, but do not know the individual properties of the individual units of product. An example of such a market can serve as already mentioned market bulbs. Bulbs for technological reasons are obtained unequal, and manufacturer, as well as the buyer ,It can estimate the duration of their glow only statistically. In this case there is one feature suggestions bulbs, independent of their quality characteristics.
A substantially different picture emerges when the buyer and seller have different information about the quality of goods sold units -there is asymmetry of information (information is distributed asymmetrically between the parties to the transaction) Here is a typical case where the buyer evaluates the quality of the product is statistically, and the seller knows the quality of each product individually.
Consider now won by cars. The buyer knows the type, age ,Vehicle running, but does not know his individual characteristics that are detected only during the operation and which are known to the seller. buyer demand is determined by statistical characteristics of the group of cars that have the given set of clear signs, and the market set a single price for the entire group - and for the best examples ,and lemons.
Assume that at the initial moment, for whatever reasons, the market turned out to be equally good cars and lemons (in this section for the sake of simplicity, we assume that there are only two quality levels). Price will demand the simple arithmetic average of the bid prices of good and bad cars.Such a price can not be arrange some sellers of good cars, and they refuse to sell them, but the owners of bad cars she can push to the market. As a result, the proportion of good cars on the market will fall, bad - will increase. Shoppers will appreciate the changed situation, they will decrease the demand. Dropped the price will encourage more kakuyu-part owners of good cars to refuse to sell, the market share of good cars still fall to drop the price of demand and so on. d. The trend of deterioration of average quality product on the market as a result of withdrawal from the market of sellers of quality goods is called adverse selection. error status: 400error status: 400error status: 400Owning a bad car is not profitable to give guarantees, and so they are forced to reduce the price and make the quality of his car revealed.
Akerlof also noted the special importance of the mass of information asymmetries in the economies of developing countries. One such example is the credit markets in India of the 1960s, where local kreditory-moneylenders setting interest rates twice higher than the rate adopted in the big cities. But the mediator, who takes the credit in the city and lends to someone in the village, with no information on the solvency of borrowers, risks attract borrowers with low loan repayment capacity and thus dooms itself to losses. A similar situation may occur in the stock market. In the area of information technology for many information companies, small, and there is a tendency of some averaging estimates of their shares. This overstated assessment of stocks of companies that have real return below the average, and they begin to dilution of capital.These companies are starting to issue additional shares for new projects more actively than high-yield companies, whose shares are undervalued in the market. As a result, firms with lower profitability, grow faster, and the stock market zapolonyayut lemons. When uninformed investors suddenly discover their mistake ,the stock price falls and breaks an information bubble.
J.. Akerlof also investigated the problem of discrimination of ethnic minorities in the labor market. This topic has led George. Akerlof on joint economic theory and sociology, and inclusion in the economic analysis of such non-traditional neoclassical economic theory, factors like sympathy or respect between people. Akerlof noticed that feelings such as understanding of the employer`s interests or respect for co-workers ,can lead to higher wages and lower unemployment probability. Other scientific hobby J. Akerlof, was the study of the caste system and its negative impact on economic efficiency.