1. Jonathan Catalan has a great post on Akerlof's lemons paper, criticizing some skeptics. I think if most economists really thought about it they'd be in Jonathan's group 3 (accept the conclusions of the paper and think for the most part we have private solutions). I think people get a sense that most economists are in his group 2 (seek out public and private solutions) because the thing about private solutions is that they kind of take care of themselves. Plausible public solutions are in our face precisely because these are the cases that don't solve themselves (or at least not as easily). But that's not the case for most asymmetric information problem (or any other "market failure"). I'd differ a little with Jonathan on his point at the end that we don't see a lot of markets characterized by a lemons situation. He seems to conclude that Akerlof thought markets for lemons would eventually collapse. But this is only one outcome. It all depends on the critical points in the distribution of quality and expected quality and peoples' demand for quality. For certain critical values, in the Akerlof model, markets for lemons can be and are sustained indefinitely. Presumably many such markets exist and we just deal with it (or else we solve the asymmetric information problem).
2. Kevin Quinn has a really excellent paper in the latest issue of Critical Review on Adam Smith and education. I want to assign it to my class, since we spent a lot of time talking about the relationship between the division of labor and Smith's egalitarianism. Alas we're past Smith and I'm probably assigning too much anyway.
3. Gene Callahan on the Mises/Hayek divergence.
4. Yesterday J. Michael Dunn, of Indiana University, lead the discussion in our Infometrics Seminar. Unfortunately I don't have a link to the talk (although it looked like it was being taped), but you can find info on his work in the link above. Our seminar is basically on information theory, and he spent a lot of time connecting the math of information theory to code and computation.
A New Front in My War Against Scott Sumner
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