Birthday Wishes

First, we take a moment to wish a happy birthday to George Akerlof. Akerlof won the Nobel Prize for Economics in 2001. Whether you know it or not, you use his work when you talk about information asymmetries in markets - or as it is more commonly called the market for lemons. In this case a lemon refers to used cars.

The basic idea is that the seller has superior knowledge of the car, and is therefore in a better bargaining position. The buyer, having inferior knowledge, is in a poorer position. Thus a correct market price, which depends in part on "perfect information", is unlikely.

If you want to read Akerlof's Nobel biography, go here. If you would like to read his Nobel acceptance speech, go here.

Either way, celebrate with a glass of lemonade.