Examples of Work by George Arthur Akerlof
George Arthur Akerlof
George Arthur Akerlof was born in June 17, 1940. He is an economics professor at the University of California, Berkeley. He won Nobel Prize in economic sciences in 2001. Akerlof graduated got his B.A. degree from Yale University in 1962, and his Ph.D. degree from MIT in 1966. He married to Janet Yellen. Akerlof is best known for his article, 'The Market for Lemons: Quality Uncertainty and the Market Mechanism' , published in Quarterly Journal of Economics in 1970. The most renowned work of George Arthur Akerlof is Identity Economics: How Our Identities Shape Our Work, Wages, and Well-Being,Identity and the Economics of Organizations, Economics and Identity, An Economic Theorist's Book of Tales,Looting: The Economic Underworld of Bankruptcy for Profit.
'Horrendous': Nobel economist George Akerlof criticizes Bush administration's economic stimulus package
US nobel laureate slams Bush gov't as 'Worst' in american history
Waiting for work
This paper explains upward job mobility and observed patterns of
unemployment by skill as an economy recovers from a recession. Skilled
unemployment is due to rational waiting by workers looking for long-term jobs
when there is a 'lock-in' effect. Lock-in occurs if the conditions in the
labor market when a worker first accepts a job have a persistent effect on
wages. Using longitudinal data, we provide empirical evidence of the cyclical
pattern of wages predicted by the theory and also of lock-in.
The quaterly journal of economics
This paper considers how identity, a person’s sense of self, affects economic outcomes.We incorporate the psychology and sociology of identity into an economic
model of behavior. In the utility function we propose, identity is associated with
different social categories and how people in these categories should behave. We
then construct a simple game-theoretic model showing how identity can affect
individualinteractions.The paper adapts these models to gender discriminationin
the workplace, the economics of poverty and social exclusion, and the household
division of labor. In each case, the inclusion of identity substantively changes
conclusions of previous economic analysis.
Looting: The economic underworld of bankruptcy for profit
During the 1980s, a number of unusual financial crises occurred. In Chile, for example, the financial sector collapsed, leaving the government with responsibility for extensive foreign debts. In the United States, large numbers of government-insured savings and loans became insolvent - and the government picked up the tab. In Dallas, Texas, real estate prices and construction continued to boom even after vacancies had skyrocketed, and the suffered a dramatic collapse. Also in the United States, the junk bond market, which fueled the takeover wave, had a similar boom and bust.
In this paper, we use simple theory and direct evidence to highlight a common thread that runs through these four episodes. The theory suggests that this common thread may be relevant to other cases in which countries took on excessive foreign debt, governments had to bail out insolvent financial institutions, real estate prices increased dramatically and then fell, or new financial markets experienced a boom and bust. We describe the evidence, however, only for the cases of financial crisis in Chile, the thrift crisis in the United States, Dallas real estate and thrifts, and junk bonds.
Our theoretical analysis shows that an economic underground can come to life if firms have an incentive to go broke for profit at society's expense (to loot) instead of to go for broke (to gamble on success). Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations.
The missing motivation in macroeconomics
The discovery of five neutralities surprised the economics profession and forced the re-thinking of macroeconomic theory. Those neutralities are: the independence of consumption and current income (given wealth); the independence of investment and finance decisions (the ModiglianiMiller theorem); inflation stability only at the natural rate of unemployment; the ineffectiveness of macro stabilization policy with rational expectations; and Ricardian equivalence. However, each of these surprise results occurs because of missing motivation. The neutralities no longer occur if decision makers have natural norms for how they should behave. This lecture suggests a new agenda for macroeconomics with inclusion of those norms.
Psychology's Role in Economics Talk
The Economic crisis
His most recent publications includes :
Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
look inside: Animal Spirits: How Human Psychology Drives the Economy, and Why It Matters for Global Capitalism
Explorations in Pragmatic Economics
look inside: Explorations in Pragmatic Economics
Efficiency Wage Models of the Labor Market
look inside: Efficiency Wage Models of the Labor Market