The Contributions of the Economics of Information to Twentieth Century Economics
Author(s)
Stiglitz, Joseph E.
Abstract
Out of the entire field of economics, economics of information most likely has the largest area for future work. It is now recognized that information is imperfect, obtaining information can be costly, there are important asymmetries of information, and the extent of information asymmetries is affected by actions of firms and individuals. This recognition deeply affects the understanding of wisdom inherited from the past, such as the fundamental welfare theorem and some of the basic characterization of a market economy, and provides explanations of economic and social phenomena that otherwise would be hard to understand.
