The Economics of Information

Stigler's opening move in what became the economics of information: if information is costly to acquire, then price dispersion in a market is not a sign of irrationality but the rational equilibrium outcome of search behaviour. Buyers stop searching when the marginal cost of one more quote exceeds the expected saving, and sellers exploit that stopping rule. The paper is short, almost conversational, and yet it founded a subfield — every subsequent treatment of search costs, matching, and consumer behaviour under uncertainty traces back to this 1961 article. For product direction the resonance is immediate: pricing pages, onboarding flows, comparison tools, and the whole tension between discoverability and revenue are applied versions of Stigler's problem. Read alongside Arrow's Economics of Information: An Exposition for the market-failure companion and Shapiro and Varian's Information Rules for the operational extension into digital goods.