Information economics or the economics of information is a branch of microeconomic theory that studies how information affects an economy and economic decisions. Information has special characteristics. It is easy to create but hard to trust. It is easy to spread but hard to control. It influences many decisions. These special characteristics (as compared with other types of goods) complicate many standard economic theories.
The subject of "information economics" is treated under Journal of Economic Literature classification code JEL D8 - Information, Knowledge, and Uncertainty. The present article reflects topics included in that code. There are several subfields of information economics. Information as signal has been described as kind of negative measure of uncertainty It includes complete and scientific knowledge as special cases. The first insights in information economics related to the economics of information goods.
In recent decades, there have been influential advances in the study of information asymmetries and their implications for contract theory, including market failure as a possibility.
Information economics is formally related to game theory as to different types of games that may apply, including games with perfect information, complete information, and incomplete information. Experimental and game-theory methods have been developed to model and test theories of information economics, including potential public-policy applications such as mechanism design to elicit information-sharing and otherwise welfare-enhancing behavior.
Read more about Information Economics: Value of Information, Information and The Price Mechanism, Information Asymmetry, Information Goods, More Information
Famous quotes containing the words information and/or economics:
“In the information age, you don’t teach philosophy as they did after feudalism. You perform it. If Aristotle were alive today he’d have a talk show.”
—Timothy Leary (b. 1920)
“The new sound-sphere is global. It ripples at great speed across languages, ideologies, frontiers and races.... The economics of this musical esperanto is staggering. Rock and pop breed concentric worlds of fashion, setting and life-style. Popular music has brought with it sociologies of private and public manner, of group solidarity. The politics of Eden come loud.”
—George Steiner (b. 1929)