Imperfect information and market regulation
In this essay Joseph Stiglitz discusses how imperfect information leads to a lack of competition and especially to problems in the financial sector. He adds that in a modern economy concerns about information will intensify and the need for government regulation will become greater.
Looking forward, changes in structure of demand (that is, as a country gets richer, the mix of goods purchased changes) and in technology may lead to an increased role of information and increased consequences of information imperfections, decreased competition, and increasing inequality. Many key battles will be about information and knowledge (implicitly or explicitly)—and the governance of information.
The Revolution of Information Economics: The Past and the Future
Author: Joseph Stiglitz
From:Columbia University
Imperfect information and free markets
Bowles and al argue that Hayek’s view of market system can be compared to an “algorithm” which aggregates information and then uses it to coordinate the agents in the market. The more communication and computational technologies develop the more efficient the market becomes.
…we believe that Hayek’s economic vision and critique of equilibrium theory not only remain relevant, but apply with greater force as information has become ever more central to economic activity and the complexity of the information aggregation process has become increasingly apparent.
Retrospectives: Friedrich Hayek and the Market Algorithm
Authors: Samuel Bowles, Alan Kirman, Rajiv Sethi
From: Santa Fe Institute – Ecole des Hautes Etudes en Sciences Sociales – Columbia University
Why pit Stiglitz against Hayek?
Imperfect Information: Is It For or Against Free Markets?
By: Timothy Taylor – Editor of the Journal of Economic Perspectives
The Understanding and Misunderstanding of Imperfect Information
By: David Glasner – Federal Trade Commission
