MICHAEL A. SPENCE Biography - Famous Scientists


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Name: A. Michael Spence                                                         
Born: 1943, Montclair, New Jersey, U.S.                                         
American economist who, with George A. Akerlof and Joseph E. Stiglitz, won the   
Nobel Prize for Economics in 2001 for laying the foundations for the theory of   
markets with asymmetric information.                                             
Spence studied at Yale University (B.A., 1966), the University of Oxford (B.A., 
M.A., 1968), and Harvard University (Ph.D., 1972). He taught at Harvard and at   
Stanford University, serving as dean of the latter's business school from 1990   
to 1999.                                                                         
Through his research on markets with asymmetric information, Spence developed   
the theory of ?signaling? to show how better-informed individuals in the market 
communicate their information to the less-well-informed to avoid the problems   
associated with adverse selection. In his 1973 seminal paper ?Job Market         
Signaling,? Spence demonstrated how a college degree signals a job seeker's     
intelligence and ability to a prospective employer. Other examples of signaling 
included corporations giving large dividends to demonstrate profitability and   
manufacturers issuing guarantees to convey the high quality of a product.