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Date: | Fri Mar 31 17:18:55 2006 |
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----------------- HES POSTING -----------------
First, isn’t this question of full (or perfect) information to do with
formalization? To get hard-edged results (even to make problems
tractable at all) takes simplifying assumptions - full information,
divisibility, continuity of preferences, etc. Classical profit rate
equalization requires full information about potential profitability in
different sectors. We all know these are approximations. On a less
formal level it can be fudged (as Marshall did) but formalization
brings out the implicit assumptions.
Second, full information about what? Depends what is being
modelled. Basic perfect competition (demand and supply) requires
full information about prices offered, but not much else. Simple
intertemporal choice models require the individual to act as if she
had full knowledge of the future, etc.
Third, the full information assumption has been systematically
relaxed in modern mainstream economics - asymmetric
information is a major theme now, because we have figured out
how to model incomplete information and found that it gives useful
insights.
Tony Brewer
University of Bristol
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