Overview
All agents in the market have imperfect knowledge; however, they all have a good indicator of everyone else's knowledge and intentions, and that is the price.
The price indicates information that the player does not know; by deciding to buy, sell or abstain at that price it also gives the player a chance to bring their knowledge to bear and reflect itself in the price. Most of the knowledge, however, is tacit knowledge: people usually are not fully aware of the knowledge that they are sharing via price signals, nor do they fully perceive the knowledge that they use when they make a price decision.
When a buyer goes to market, the prices he or she finds therein for products and services have been set by the complex calculus that is the sum total of the tacit knowledge residing within the market. Price signals are one possible solution to the economic calculation problem.
Read more about this topic: Dispersed Knowledge