The Akerlof Moment: When Information Destroys Markets

Abstract. George Akerlof showed that information asymmetry can destroy markets entirely. The CES framework reveals this as a special case of a universal pattern: when information friction T reaches a critical threshold T*, effective curvature hits zero and the diversity premium vanishes. The framework provides the threshold formula, explains why some markets are resilient while others are fragile, and predicts that the 2008 financial crisis was an Akerlof moment for the entire banking system.