in fact, you may be surprised to know that the economics profession, even with its hard - headed assumption of rational actors pursuing their own self interest, has for the last few decades also focused on the role of moral and cooperative behaviors in leading to better economic outcomes. as one major example, a recent nobel prize in economics was shared by george akerloff, who in a classic paper in 1970 showed that a failure of markets arises when the seller does not share honest and complete information about the quality of a product, in his paper, used cars, with would - be buyers. 2 akerloff went on to show that such asymmetry in information and opportunistic behavior will ultimately drive honest dealings out of the market unless it is overcome by new institutional structures. some of those structures arise from the private sector. as a policymaker, i see many of those structures arise in the form of regulation. in those markets in which there is a strong likelihood that self - policing behavior will not emerge, and opportunistic behavior is a real risk, the government must create regulation to protect the weaker or less - well - informed party from the stronger, better - informed one. these regulations are well intended and often have the desired outcome ; however, in spite of the regulators ’ best efforts, they can be burdensome, and compliance with them may well consume resources that might go to providing more or better goods and services. this is not an argument against regulation ; sound regulation is needed. it is an example of the cost imposed on society by the unscrupulous behaviors of a few. not only have economists identified theoretical failures that come from unethical and opportunistic behaviors, social scientists have also demonstrated real world benefits from cooperative behaviors. for example, a study of engineers found that individual workers who are more generous with their time card, david and john e. dinardo, skill biased technological change and rising wage inequality : some problems and puzzles, journal of labor economics, vol. 20, no. 4 ( 2002 ), pp. 733 - 783. akerloff, george a., the market for lemons : quality uncertainty and the market mechanism, the quarterly journal of economics, vol. 84, no. 3 ( aug., 1970 ), pp. 488 - 500. with other workers, and in turn frequently benefit from the help of others, are more productive and have higher social standing. 3 more recently of course,

willem duisenberg : e - economy : will we still need banks in the future? speech by dr willem f duisenberg, president of the european central bank, at the seventeenth german banking congress held in berlin, 4 april 2001. * * * ladies and gentlemen, i am very pleased to have the opportunity to speak here at the deutscher bankentag in berlin today. it is a great pleasure to address so many bank leaders operating in the german - and of course, by implication the european - economy. one of the most striking economic events of the last years has been the pace and depth of change in information and telecommunication technologies, of which the development of electronic money is a good example. some claim that these developments in information and telecommunication technologies have triggered a new economy. in my remarks today, i would like to first discuss the economic opportunities being created by the potential emergence of this new economy in the euro area. in a second part, i will more specifically review the development of electronic finance. there is no undisputed and unequivocal definition of what should be understood by the term " new economy ". as a central banker, i would like to trace a sharp distinction between a more popular notion of the new economy and a more fundamental vision. the more popular notion of the new economy that could be mainly found in the press covers a wide spectrum of statements. for example, it was sometimes claimed that stock market prices had reached a permanently higher plateau and that further exceptional rises were to come. others claimed the death of the business cycle or, in a more realistic version, that business cycle fluctuations could now be expected to be significantly and permanently dampened by the emergence of a new economy. we cannot fully judge this at the current stage. and uncertainties regarding global economic developments have more or less pushed the discussion about the new economy into the background. therefore, in my comments, i shall adopt a rather cautious approach and address the more fundamental issues related to the new economy. in my interpretation of the debate, there are two main components in the concept of the new economy. these relate, first, to the way in which the new economy manifests itself and, second, to the conjunctions of particular events that accompany the emergence of the new economy. first, the new economy is seen as leading to a permanently higher rate of potential output growth, with productivity gains driven by technological innovation being the main motor behind the upsurge. the increase in productivity growth that has been