- Perfect information
Perfect information is a term used in
economicsand game theoryto describe a state of complete knowledge about the actions of other players that is instantaneously updated as new information arises. Chess, Irenseiand Go are canonical examples of games with perfect information, in contrast to, for example, the prisoner's dilemma.
microeconomics, a state of perfect information is required for perfect competition. That is, assuming that all agents are rational and have perfect information, they will choose the best products, and the market will reward those who make the best products with higher sales. Perfect information would practically mean that all consumers know all things, about all products, at all times, and therefore always make the best decision regarding purchase. In competitive markets, unlike game-theoretic models, perfect competition does not require that agents have complete knowledge about the actions of others; all relevant information is reflected in prices.
The concept of perfect information has often been criticized by the various schools of
Extensive form game
* [http://www.mises.org/story/2289 The Economics of "Groundhog Day"] by economist D.W. MacKenzie, using the 1993 film "Groundhog Day" to argue that perfect information, and therefore perfect competition, is impossible.
* Fudenberg, D. and Tirole, J. (1993) "Game Theory", MIT Press. (see Chapter 3, sect 2.2)
* Gibbons, R. (1992) "A primer in game theory", Harvester-Wheatsheaf. (see Chapter 2)
* Luce, R.D. and Raiffa, H. (1957) "Games and Decisions: Introduction and Critical Survey", Wiley & Sons (see Chapter 3, section 2)
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