Michael Spence
The author, a Nobel laureate in economics, is emeritus professor of economics and a former dean of the Graduate School of Business at Stanford University.
While official sources and the media highlight strong consumer-spending and jobs data in the United States, or tout high U.S. stock-market valuations, more than three-quarters of Americans view economic conditions as poor (36%) or fair (41%). This disconnect between performance and perception can have far-reaching consequences; it already helped to propel Donald Trump to victory in last month’s presidential election. So, what is causing it?
Here, it is worth considering how market participants deal with asymmetric information — when one party has more or better information than…
