Information and the Change in the Paradigm in Economics

It is shown that information economics represents a fundamental change in the prevailing paradigm within economics. The ways by which information assymetries are dealt with and how they can be overcome are discussed. The competitive paradigm that dominated economic thinking for two centuries was not...

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Bibliographic Details
Published in:The American economic review 2002-06, Vol.92 (3), p.460-501
Main Author: Stiglitz, Joseph E.
Format: Article
Language:English
Subjects:
Adverse selection
Business structures
Changes
Development economics
Economic efficiency
Economic models
Economic theory
Economics
Efficiency
Efficient markets
Employee insurance
Equilibrium
History
Information
Information economics
Labor market
Market equilibrium
Paradigms
Politics
Regulation of financial institutions
Studies
Unemployment
Wages
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Summary:It is shown that information economics represents a fundamental change in the prevailing paradigm within economics. The ways by which information assymetries are dealt with and how they can be overcome are discussed. The competitive paradigm that dominated economic thinking for two centuries was not robust, did not explain key economic phenomena, and led to misguided policy prescriptions. The underlying forces of demand and supply are still important, though in the new paradigm, they become only part of the analysis. They are not the whole analysis.
ISSN:0002-8282
1944-7981
DOI:10.1257/00028280260136363