4 ms·

There is no true free market in the world. One of the defining characteristics of a free market is perfect information. This is one of the downsides of market i

by iacvlvs 13y ago

There is no true free market in the world. One of the defining characteristics of a free market is perfect information. This is one of the downsides of market imperfections.

abalone 13y ago
Ergo, it is a downside of all unregulated markets. I would avoid the term "imperfection" for something that is fundamental to markets. The information on conditions of production usually has to come from the seller and there is usually little incentive for them to provide it unless compelled to.
- icebraining 13y ago
  Ergo, it is a downside of all unregulated markets. Unregulated? Do regulated markets have perfect information?
  - abalone 13y ago
    Didn't say that. Poor information on the conditions and effects of production is fundamental to unregulated markets. Much like externalities, they are not mere "imperfections" or footnotes which is usually how they are presented in pro-free-market Econ 101 texts. They are fundamental; e.g. much of the environmental threat the planet faces can be contributed to externalities and poor info. Nevermind the poor animal-poop slaves. Regulations and activism (such as this type of journalism) are some of the non-market forces that can compensate.
    - hrjet 13y ago
      But regulations may lead to bribery and other workarounds. Activism may be biased. It may also lead to long-winded debates, and ultimately, to polluted information. (Eg, global warming, GM crops, etc). Ultimately, it doesn't matter if there is regulation or not, activism or not; there is no perfect information.
      - malkia 13y ago
        You have most regulations around kid's toys, and I'm thankful for that!
- iacvlvs 13y ago
  It is fundamental to all markets in the real world. It is also a defining trait of the platonic ideal of a free market, and one of the reasons why the platonic ideal absolute free market is unrealisable. Markets can be more or less free, but never entirely so. Regulation by non-market forces is one way that markets are made less free. Such regulation is often intended to counteract or offset other things that make the market in question less free.
jes 13y ago
Why do you think that a free market requires perfect information? Do you think the situation is the same for a democracy? Does it also require perfect information? http://wichitaliberty.org/free-markets/myth-markets-depend-on-perfect-information-requiring-government-regulation-to-make-information-available/ http://wichitaliberty.org/free-markets/myth-markets-depend-o...
- ZeroGravitas 13y ago
  Your response and the URL of your link refer to free markets, and they by definition require perfect information. The info at your link talks about something else.
  - jes 13y ago
    In this definition from Wikipedia, in the section on Microeconomics, it is claimed that perfect information is a physical impossibility. Can you help me understand why free markets "by definition" require that which cannot exist? http://en.wikipedia.org/wiki/Perfect_information http://en.wikipedia.org/wiki/Perfect_information
    - makomk 13y ago
      Oh, that's easy - free markets are an ideal that can't actually exist in the real world, in part because perfect information is impossible.
      - contingencies 13y ago
        Much like democracy.
    - tikhonj 13y ago
      The same reason integrals require continuous functions, which also can't meaningfully exist: it's a mathematical model. Just because it can't possibly exist in the real world does not mean it's useless or even "wrong" per se.
    - 13y ago
Zuider 13y ago
>One of the defining characteristics of a free market is perfect information. 'Perfect information' is an unrealistic assumption used in neoclassical models which treat knowledge as just another input, on a par with raw ore, pork bellies or gasoline. In the real world it just doesn't work like that. The defining characteristic of the free market is that it is a creative process of discovery. It creates knowledge where none existed before. There can be no such thing in principle as 'perfect information'. Information tends to exist in the state of being inherently dispersed among the actors, often tacit to the point of being inexpressible. The market facilitates the use of such knowledge, and the the discovery of new knowledge.

by iacvlvs 13y ago

There is no true free market in the world. One of the defining characteristics of a free market is perfect information. This is one of the downsides of market imperfections.

abalone 13y ago

Ergo, it is a downside of all unregulated markets. I would avoid the term "imperfection" for something that is fundamental to markets. The information on conditions of production usually has to come from the seller and there is usually little incentive for them to provide it unless compelled to.

icebraining 13y ago
Ergo, it is a downside of all unregulated markets. Unregulated? Do regulated markets have perfect information?
- abalone 13y ago
  Didn't say that. Poor information on the conditions and effects of production is fundamental to unregulated markets. Much like externalities, they are not mere "imperfections" or footnotes which is usually how they are presented in pro-free-market Econ 101 texts. They are fundamental; e.g. much of the environmental threat the planet faces can be contributed to externalities and poor info. Nevermind the poor animal-poop slaves. Regulations and activism (such as this type of journalism) are some of the non-market forces that can compensate.
  - hrjet 13y ago
    But regulations may lead to bribery and other workarounds. Activism may be biased. It may also lead to long-winded debates, and ultimately, to polluted information. (Eg, global warming, GM crops, etc). Ultimately, it doesn't matter if there is regulation or not, activism or not; there is no perfect information.
    - malkia 13y ago
      You have most regulations around kid's toys, and I'm thankful for that!
iacvlvs 13y ago
It is fundamental to all markets in the real world. It is also a defining trait of the platonic ideal of a free market, and one of the reasons why the platonic ideal absolute free market is unrealisable. Markets can be more or less free, but never entirely so. Regulation by non-market forces is one way that markets are made less free. Such regulation is often intended to counteract or offset other things that make the market in question less free.

jes 13y ago

Why do you think that a free market requires perfect information? Do you think the situation is the same for a democracy? Does it also require perfect information? http://wichitaliberty.org/free-markets/myth-markets-depend-on-perfect-information-requiring-government-regulation-to-make-information-available/ http://wichitaliberty.org/free-markets/myth-markets-depend-o...

ZeroGravitas 13y ago
Your response and the URL of your link refer to free markets, and they by definition require perfect information. The info at your link talks about something else.
- jes 13y ago
  In this definition from Wikipedia, in the section on Microeconomics, it is claimed that perfect information is a physical impossibility. Can you help me understand why free markets "by definition" require that which cannot exist? http://en.wikipedia.org/wiki/Perfect_information http://en.wikipedia.org/wiki/Perfect_information
  - makomk 13y ago
    Oh, that's easy - free markets are an ideal that can't actually exist in the real world, in part because perfect information is impossible.
    - contingencies 13y ago
      Much like democracy.
  - tikhonj 13y ago
    The same reason integrals require continuous functions, which also can't meaningfully exist: it's a mathematical model. Just because it can't possibly exist in the real world does not mean it's useless or even "wrong" per se.
  - 13y ago

Zuider 13y ago

>One of the defining characteristics of a free market is perfect information. 'Perfect information' is an unrealistic assumption used in neoclassical models which treat knowledge as just another input, on a par with raw ore, pork bellies or gasoline. In the real world it just doesn't work like that. The defining characteristic of the free market is that it is a creative process of discovery. It creates knowledge where none existed before. There can be no such thing in principle as 'perfect information'. Information tends to exist in the state of being inherently dispersed among the actors, often tacit to the point of being inexpressible. The market facilitates the use of such knowledge, and the the discovery of new knowledge.