Akerlof is perhaps best known for his article, "The Market for Lemons: Quality Uncertainty and the Market Mechanism", published in Quarterly Journal of Economics in 1970, in which he identified certain severe problems that afflict markets characterized by asymmetrical information, the paper for which he was awarded the Nobel Prize. In Efficiency Wage Models of the Labor Market, Akerlof and coauthor Janet Yellen propose rationales for the efficiency wage hypothesis in which employers pay above the market-clearing wage, in contradiction to the conclusions of neoclassical economics.

In the late 1990s Akerlof's ideas attracted the attention of some on both sides of the debate over legal abortion. In articles appearing in The Quarterly Journal of Economics, The Economic Journal, and other forums Akerlof described a phenomenon that he labeled "reproductive technology shock." He contended that the new technologies that had helped to spawn the late twentieth century sexual revolution, modern contraceptives and legal abortion, had not only failed to suppress the incidence of out-of-wedlock childbearing, they had actually worked to increase it. According to Akerlof, for women who did not use them, these technologies had largely transformed the old paradigm of socio-sexual assumptions, expectations, and behaviors in ways that were especially disadvantageous. For example, the availability of legal abortion now allowed men to view their offspring as the deliberate product of female choice rather than as the chance product of sexual intercourse. Thus it encouraged biological fathers not only to reject any supposed obligation to marry the mother, but to reject the very idea of paternal obligation.

While Akerlof did not recommend legal restrictions on either abortion or the availability of contraceptives, his analysis seemed to lend support to those who did. Thus, a scholar strongly associated with liberal and Democratic-leaning policy positions, has been approvingly cited by conservative and Republican-leaning analysts and commentators.

In 1993 Akerlof and Paul Romer brought forth "Looting: The Economic Underworld of Bankruptcy for Profit", describing how under certain conditions, owners of corporations will decide it is more profitable for them personally to 'loot' the company and 'extract value' from it instead of trying to make it grow and prosper. IE:

"Bankruptcy for profit will occur if poor accounting, lax regulation, or low penalties for abuse give owners an incentive to pay themselves more than their firms are worth and then default on their debt obligations. Bankruptcy for profit occurs most commonly when a government guarantees a firm's debt obligations."

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Yves Smith argues in her book "Econned" that Akerlof and Romer's "Looting" theory applies to the subprime mortgage crisis and the Financial crisis of 2007-2010. She argues that the 'Looted' companies in this case are banks and others who were 'looted' by certain traders and executives within those companies.

In his 2007 presidential Address to the American Economic Association, Akerlof proposed natural norms that decision makers have for how they should behave. In this lecture Akerlof proposed a new agenda for macroeconomics with inclusion of those norms.

He is a trustee of the Economists for Peace and Security, and co-director of the Social Interactions, Identity and Well-Being program at the Canadian Institute for Advanced Research (CIFAR). He is in the advisory board of the Institute for New Economic Thinking.

His father was Swedish and his mother a Jewish/German-American. Akerlof graduated from the Lawrenceville School and received his B.A. degree from Yale University in 1962, and his Ph.D. degree from MIT in 1966, and has taught at the London School of Economics. His wife Janet Yellen is president of the Federal Reserve Bank of San Francisco and a professor of economics at UC Berkeley and served on President Bill Clinton's Council of Economic Advisors.