George Akerlof

George Akerlof is an economist and 2001 Nobel Laureate in Economic Sciences (shared with Michael Spence and Joseph Stiglitz). His 1970 paper "The Market for Lemons: Quality Uncertainty and the Market Mechanism" became one of the most cited papers in economics and the foundational text of information economics. The paper uses the used car market as a metaphor to show that when sellers know more about product quality than buyers (information asymmetry), adverse selection can unravel markets entirely — buyers, anticipating they might receive "lemons" (low-quality cars), offer lower prices, which drives good sellers out of the market, which further reduces average quality and price, until the market collapses. This insight has been applied extensively in financial markets (explaining phenomena like credit rationing, bank runs, and insurance market failure), healthcare, and labor markets. Akerlof is also known for research on behavioral economics, identity economics (with Rachel Kranton), and the economics of "norms" and social capital. He is married to Federal Reserve Chair Janet Yellen.