Saturday, July 16, 2005

Asymmetric Information/Information Asymmetry

Here is what Wikipedia says about 'Information Asymmetry', and as the name suggests - uneven spread of relevant information among different market participants. It is mentioned by economists more often than anybody else (recently by Levitt in 'Freakanomics').

The seminal paper that introduced the concept of asymmetric information is Nobel Prize winning economist Kenneth Arrow's "Uncertainty and the Welfare Economics of Medical Care", 1963. One of the later papers that popularized this work is another Nobel Prize winning economist George Akerlof's 1970 paper titled "The Market for 'Lemons'". Other noted economists who have contributed immensely to this area include Joseph Stiglitz, Michael Spence, James Mirrlees and William Hickery.

Some interesting reads..
"The Economics of Information" by Joseph J. Stigler
"A Nobel Prize for Asymmetric Information: The Economic Contributions of George Akerlof, Michael Spence, and Joseph Stiglitz"by J. Barkley Rosser Jr. (References has a list of all the papers by these three economists in the area of asymmetric information)
"Why Good Guys are not Selected by girls: a view based on adverse selection" by Sebastien Walti
"Market for Lemons: What George Akerlof learnt from India?"


At 8/30/2006 12:29:00 AM, Blogger Shumit said...

Nice post...The concept is super interesting and i tried to relate it to the dating scenario...Wrote it sometime back last year and now when i go through it i feel like puking on it. Btw...check out nilu's


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