# George Akerlof The American economist who **founded modern information economics** through his 1970 paper "The Market for Lemons: Quality Uncertainty and the Market Mechanism" — one of the most-cited economics papers ever written and the foundational text on adverse selection. Akerlof (b. 1940) was awarded the 2001 Nobel Prize in Economics (shared with Michael Spence and [[Joseph Stiglitz]]) for his information-economics work. ## Career and contribution **Background.** Yale (BA 1962), MIT (PhD 1966). Most of his career at UC Berkeley (1966–2014). Currently Professor at Georgetown University. Husband of Janet Yellen (former Federal Reserve Chair, current Treasury Secretary), with whom he has frequently collaborated. **The Lemons paper (1970).** "The Market for Lemons" was famously rejected by three major economics journals before being accepted by the *Quarterly Journal of Economics*. The paper introduces the lemons-market analysis: in markets with asymmetric information (sellers know quality, buyers don't), the market can fail entirely as good products are driven out by bad ones (the "lemons"). The framework has applications across insurance, labor markets, credit markets, and many others. See [[Adverse Selection]] for the full treatment. **Identity Economics.** Later work with Rachel Kranton developed *identity economics* — the formal incorporation of identity considerations into economic decision-making. The framework provides one of the more rigorous analyses of how non-monetary considerations (in-group vs. out-group identity, professional norms, religious commitments) shape economic behavior in ways classical models don't capture. **Behavioral macroeconomics.** Akerlof has been a leading figure in incorporating psychological findings into macroeconomic models, including work on "near-rational" behavior, social interactions in markets, and the role of identity and norms in aggregate economic outcomes. ## KB significance **The empirical foundation of consumer protection.** Akerlof's adverse-selection framework is the rigorous economic justification for consumer-protection regulation, mandatory disclosure rules, and various regulatory interventions in information-asymmetric markets. The framework is foundational; right-wing economic critique of consumer protection often operates as if information-asymmetry markets don't fail, which Akerlof's work rigorously refutes. ## See also - [[Adverse Selection]] — the eponymous framework - [[Moral Hazard]] — closely related concept - [[The Market for Lemons]] *(stub candidate — Akerlof's 1970 foundational paper)*