Gans and Shepherd (1994)’s article created among editors what I think of as the fear of rejecting the “Market for Lemons,” based on the fact that Akerlof’s 1970 “Market for Lemons” paper was rejected by three prominent journals, including the AER. No one wants to go down in history as the editor who rejected a paper that subsequently contributed greatly to a person’s winning a Nobel prize. However, I eventually came to the conclusion that the fear is overblown. There are type 1 and type 2 errors and any procedure that never rejects the “Market for Lemons” produces a low average quality. One lesson, indeed, is to be open to the new and different. I use a higher bar for ‘booming’ topics that generate a lot of current excitement and hence may be a fad. (At the time of this writing, behavioral economics is such a topic.) A second lesson from Akerlof’s experience is to be careful in crafting rejection letters; the letters Akerlof received, with their smug acceptance of general equilibrium as the end state of economics, look pathetic today. Finally, Akerlof’s experience was unusual in that his rejection wasn’t perpetrated by Lord Keynes. Absent Keynes, who I think suffered mightily from the personal agenda problem discussed above, there are not so many great rejected papers.
I agree that there is always a risk of errors and fear of them does not necessarily make for good outcomes. But I think that it is not correct to say that Akerlof’s experience was so unusual. If we had wrote our paper without reference to Keynes it would have had just as big an impact. So many other famous economists had their most famous papers rejected including Paul Krugman and Robert Lucas. I wonder whether things have changed since 1994.