Academic, Economist (1940-Present)
George Akerlof is an American economist who, alongside Joseph Stieglitz, won the Nobel Prize in 2001 for his work on informational asymmetries. He is an accomplished academic and Emeritus professor of economics at the University of California, Berkeley.
Akerlof is known mostly for his work on asymmetric information, particularly his 1970 article ‘The Market for Lemons: Quality Uncertainty and the Market Mechanism’. Akerlofidentified severe informational problems that afflict markets, causing inefficiencies. For instance, in the second-hand car market, buyers have less information than sellers, creating the potential for the market to unravel as buyers cannot tell with any certainty whether a particular car is a peach (a good car) or a lemon (a car likely to breakdown).
Akerlof, in a paper co-authored with his wife Janet Yellen, also proposed rationales for the efficiency wage hypothesis. They posit that employers pay above market-clearing wages in order to raise moral and incentivise the employed to work more efficiently as the opportunity cost of being fired is higher.
“When men do all the outside work, they contribute on average about 10% of housework. But as their share of outside work falls, their share of housework rises to no more than 37%.”
– George Akerlof