John N. Drobak

Thrainn Eggertsson and the Problem of Knowledge: The Effectiveness of Conveying Information in the Electoral and Financial Markets

Throughout his career, Thrainn Eggertsson has been concerned with improving economic theory as a way to help us to understand the economic world. This has led him to focus on the problem of knowledge, which Eggertsson believes hinders the improvement of theory. This essay attempts to contribute to a better understanding of the knowledge problem by examining some aspects of the way people process information. The essay posits that belief systems and non-rational decision-making limit the effectiveness of information transmission and make people reluctant to accept and process new information. To illustrate this concern, it examines use two types of information “markets.” First, the essay will consider whether information about political candidates is effective in changing the views of the voters. Then it will examine the conservatism of economists as an important factor in decisions about the appropriate degree of economic regulation. My hope is that the essay will make a small contribution toward helping with what Trainn has identified as the knowledge problem.

A cognitive science perspective on legal incentives

This outstanding book presents new original contributions from some of the world’s leading economists including Ronald Coase, Douglass C. North, Masahiko Aoki, Oliver E. Williamson and Harold Demsetz. It demonstrates the extent and depth of the New Institutional Economics research programme which is having a worldwide impact on the economics profession.