The essay by Joseph E. Stiglitz discusses the significant impact of information economics on 20th-century economics, highlighting how the recognition of imperfect information, the costs of obtaining information, and the existence of information asymmetries has transformed traditional economic theories. Stiglitz argues that this new understanding has profound implications for welfare economics, market efficiency, and the role of institutions. The essay traces the evolution of information economics from early 18th and 19th-century insights to modern developments, emphasizing the contributions of economists like Marshall, Hayek, and Arrow. It also explores the implications of information economics for areas such as capital markets, taxation, and economic policy, showing how it has challenged conventional wisdom and led to new insights into economic phenomena. The essay concludes by discussing the broader implications of information economics for economic theory and practice, including the importance of institutions and the nonconvexities associated with information.The essay by Joseph E. Stiglitz discusses the significant impact of information economics on 20th-century economics, highlighting how the recognition of imperfect information, the costs of obtaining information, and the existence of information asymmetries has transformed traditional economic theories. Stiglitz argues that this new understanding has profound implications for welfare economics, market efficiency, and the role of institutions. The essay traces the evolution of information economics from early 18th and 19th-century insights to modern developments, emphasizing the contributions of economists like Marshall, Hayek, and Arrow. It also explores the implications of information economics for areas such as capital markets, taxation, and economic policy, showing how it has challenged conventional wisdom and led to new insights into economic phenomena. The essay concludes by discussing the broader implications of information economics for economic theory and practice, including the importance of institutions and the nonconvexities associated with information.