- The Washington Times - Thursday, October 11, 2001

STOCKHOLM (AP) Three Americans won the Nobel prize for economics yesterday for research into how the control of information influences everything from used-car sales to the recent boom and collapse in high-tech stocks.
George A. Akerlof of the University of California at Berkeley; A. Michael Spence, 58, of Stanford University; and Joseph E. Stiglitz, 58, of Columbia University will share the $943,000 award.
So far, eight Americans have won Nobel prizes this year, one more than last year.
The laureates laid the foundation in the 1970s for a general theory about how players with differing amounts of information affect a wide range of markets.
Research into "asymmetric information" gave economists a way to measure the risks, for example, faced by a lender who lacked information about a borrower's creditworthiness.
It also explored how people with inside knowledge of a high-technology company's financial prospects gain an edge over other investors, while people who don't fully understand a company's finances may invest unwisely.
The theory helps economists explain why the recent bubble in high-technology stocks burst.
The winners' contributions "form the core of modern information economics," the Royal Swedish Academy of Sciences said in a written announcement.
It cited a watershed 1970 paper by Mr. Akerlof called "The Market for Lemons," which used car sales as an example of bigger markets.
"Markets such as for used cars tend to be rather screwed up," Mr. Akerlof, 61, told the Associated Press yesterday.
"When you buy a used car you're always careful because you're wondering why that person is selling the car. When you're selling, you're worried you're not going to get a good price," he said. "People are suspicious."
The award, known formally as the Nobel Memorial Prize for Economic Sciences, was the second prize announced yesterday.
Two Americans and a Japanese scientist shared the chemistry prize in the morning for showing how to better control chemical reactions, leading to medicines including a treatment for Parkinson's disease.
William S. Knowles, 84, of St. Louis, and Ryoji Noyori, 63, of Nagoya University in Japan shared half the award. K. Barry Sharpless, 60, of the Scripps Research Institute in La Jolla, Calif., won the other half.
The prestigious prizes for medicine, physics, chemistry, literature and peace were established in the will of Alfred Nobel, the Swedish industrialist and inventor of dynamite, and were first awarded in 1901.
The economics prize was established separately in 1968 by the Swedish central bank, but it is grouped with the other awards.
The physics winner was announced on Tuesday, following Monday's awarding of the medicine prize. The literature prize will be announced today and the peace prize tomorrow in Oslo.
The prizes are always presented to the winners on Dec. 10, the anniversary of Nobel's death in 1896.
To mark the 100th anniversary of the prizes, all living laureates have been invited to the ceremonies this year, with some 150 expected in Stockholm and 30 in Oslo.
Last year's economics prize was won by Americans James J. Heckman and Daniel L. McFadden for their work in developing theories to help analyze labor data and how people make work and travel decisions.

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