The Royal Swedish Academy of Sciences has announced the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel, 2001.
The joint winners are George Akerlof, University of California at Berkeley, USA; A. Michael Spence, Stanford University, USA, and Joseph Stiglitz, Columbia University, USA, for their analyses of markets with asymmetric information.
George Akerlof was Cassel Professor with respect to money and banking at LSE from 1978 to 1980. He worked alongside Professor Meghnad Desai who said: 'On behalf of the School, I send my warmest congratulations to George. He is justly rewarded for his pioneering and innovative work on information theory and how he has related economics to other social sciences. He is the most unusual economist of our age.'
The Nobel prize award came from his work demonstrating how a market where sellers have more information than buyers about product quality can contract into an adverse selection of low-quality products. He also pointed out that informational problems are commonplace and important. Akerlof's pioneering contribution has shown how asymmetric information of borrowers and lenders may explain skyrocketing borrowing rates on local Third World markets. It has also dealt with the difficulties for the elderly to find individual medical insurance and with labour-market discrimination of minorities.
Now 61, Professor Akerlof was born 1940 in New Haven, Connecticut and gained a PhD from MIT in 1966. He has held a professorship at Indian Statistical Institute as well as LSE, and since 1980 has been Goldman Professor of Economics at the University of California at Berkeley.
This means that 13 former LSE staff or alumni have now been awarded Nobel prizes.
12 October 2001