Do markets have “perfect information”?
Perfect information seems to be a neoclassical/mainstream term. How is the term perceived in Austrian Economics?
Markets bring all the information known by all individuals into a single network of exchange and communication, and in that sense they have “perfect information” because they know as much as all individuals combined. That, however, does not mean that this information cannot be mistaken, or incomplete.
I concur. It’s markets that have “perfect information” but not individuals a la Hayek’s knowledge problem.
I don’t think there’s any need to torture the word ‘perfect’ in quite that way.
why not just say that perfection in knowledge as in many things is an absurd notion?
NirgrahamUK, would you recommend not using the term “perfect information” at all in the realm of AE?
yes I would.
I would go with something like “total information” or “global information”.
The market process itself is a discovery process. For everyone!
So I personally don’t see what place is there for “perfect information” in the study of economics at all.
One of the arguments I run into against the free market is that “free marketers” argue that the market has perfect information. I usually take the route of defending market as having “perfect information”, with the stipulation that individuals do not have perfect information.
If I take the markets do not have perfect information route, there is that “I got you moment” of interventionists, suggesting that since markets do not have perfect information, that government needs to be there. I usually respond by saying, governments do not have perfect information either.
Per this discussion, it seems stronger to disown the term “perfect information” from the free market, and focus on the discovery process. Thoughts? This may open a can of worms for interventionists.
There can be no such thing as perfect information. No one or group can possibly now the desires of all individuals. Even if one thought he had or was able to collect “perfect information”, it would only be knowledge of the past. Knowing the past doesn’t grant predictive powers. Statistics are a great aide in planning, but they can not read minds. The market left unfettered just does great things, like making people want to work together, or for each other.
Peace through exchange.
Economics makes no such claims of “perfect information”, so yes, it is wise to immediately debunk this myth.
Any talk about information (or knowledge) is meaningless in the absence of a market. If individuals are not free to act according to their own values, no meaningful information with respect to their wants can be discovered. The government itself distorts and finally destroys this process.
If they did it would be impossible to beat them. But it’s not. Just darn hard.