Douglass North Quotes

The 1970s was the decade of developments in the new area of information economics. Search theory, which emphasized the need to gather information, was joined by models that featured asymmetric information, the case in which information differed across individual agents.

Promoting the interaction of orders remains one of the most difficult, but crucially important, challenges we face concerning our national market system.

So everybody has some information. The function of the markets is to aggregate that information, evaluate it, and get it incorporated into prices.

The main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism. The most obvious cost of 'organizing' production through the price mechanism is that of discovering what the relevant prices are.

Market design is about understanding the details of markets in sufficient detail so that we can help fix them when they are broken.

During my Ph.D. program, I became interested in the informational structure of markets that turned into the work on signaling, which was the part of my early work that was recognized for the Nobel Prize, but it was not really a subject at the time.

The free market is not a god; we have to do everything we can to make the market competitive.

Markets have built in inefficiencies, serious inefficiencies which are well known.

One of the reasons why we can make a lot of money in equity markets is because they're auction-driven, and auction-driven markets are very different from almost any other kind of market.

Markets are, in many settings, self-organizing and 'efficient' in terms of maximizing the welfare of both buyers and sellers.

If the private insurance market can survive in a context of a public option, good for them. But if they can't, then that will tell you something about the nature of the market.

Consumers fare best when the barriers to business entry are low, which helps ensure that the market - any market - becomes competitive and stays that way.

To establish the right price for a stock, the market must have adequate information, but it by no means follows that is the market has this information it will thereupon establish the right price.

Capitalism has taught us that markets are always more efficient than hierarchical managerial coordination. But in a situation where those three conditions aren't met, I can't outsource or partner with you because markets don't function in the absence of sufficient information.

If I know what to spec, and I can measure it, and there are no unpredictable interdependencies between what you do and what I must do in response, then an economist would say that is sufficient information for a market to emerge between you and me.

In fact, a large part of what we think of as economic activity is designed to accomplish what high transaction costs would otherwise prevent or to reduce transaction costs so that individuals can negotiate freely and we can take advantage of that diffused knowledge of which Friedrich Hayek has told us.

The generally accepted view is that markets are always right -- that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite view. I believe the market prices are always wrong in the sense that they present a biased view of the future.

If you let markets - in general, my belief is that if you let markets give you information, they'll give you the information rather than artificially prop up everything.

A shilling life will give you all the facts.

There are some areas of the US where competition is less than desirable. And we need to be careful not to overly consolidate the hospital industry. But some consolidation is both necessary and desirable.

You'll find many markets where bottlers of Pepsi and Coke both make a lot of money and many others where they destroy most of the profitability of the two franchises. That must get down to the peculiarities of individual adjustment to market capitalism. I think you 'd have to know the people involved to fully understand what was happening.

For a small open economy that trades mostly with the euro zone it makes absolute sense to be part of the currency union. Our currency has already pegged to the euro since 2002. We don't have an independent monetary policy. We are regulated by the European Central Bank in Frankfurt, but we are not able to reap all the profits. Our businesses want to save the transaction costs.

Use the formula P=40 to 70, in which P stands for the probability of success and the numbers indicate the percentage of information acquired. Once the information is in the 40 to 70 range, go with your gut.

The argument for the free market is a complicated and sophisticated one and depends on demonstration of secondary effects. I have confidence market efficiency will win out.

Information is just signs and numbers, while knowledge involves their meaning. What we want is knowledge, but what we get is information.