Information Economics Plain Talk

Author: Wang Zekuo
Publisher:
Publish Date: 2006-01-01
Features: The 2001 Nobel Prize in Economics was awarded to three American economists, George Akerlof, Michael Spence, and Joseph Stiglitz. The announcement from the Royal Swedish Academy of Sciences stated that this was in recognition of their contributions to the study of "asymmetric information" markets, whose work laid the foundation for the core of information economics. In an economic relationship, one party possesses more information than the other, which is their "private information." Consequently, they have the motivation to exploit this private information for their advantage. This is also one of the reasons why many of us have been deceived. The existence of private information leads to "asymmetric information." Markets with asymmetric information exhibit some patterns very different from traditional markets, and corresponding institutional development is necessary for them to function well. The main problem brought about by asymmetric information is dishonesty and breach of trust. In this sense, information economics is the study of "how to make people tell the truth and how to make people keep their promises." This book introduces many fascinating aspects of information economics to readers by starting with familiar examples such as King Solomon's judgment, King Qian of Qi not being a victim of the practice, the attractive price discrimination of airlines in developed countries, the frustrations of home renovation, the effect of higher education brands without the need for large-scale sales, and more.