Information economics

Information economics or the economics of information is the branch of microeconomics that studies how information and information systems affect an economy and economic decisions.^[1]

One application considers information embodied in certain types of commercial products that are "expensive to produce but cheap to reproduce."^[2] Examples include computer software (e.g., Microsoft Windows), pharmaceuticals and technical books. Once information is recorded "on paper, in a computer, or on a compact disc, it can be reproduced and used by a second person essentially for free."^[2] Without the basic research, initial production of high-information commodities may be too unprofitable to market, a type of market failure. Government subsidization of basic research has been suggested as a way to mitigate the problem.^[2]

The subject of "information economics" is treated under Journal of Economic Literature classification code JEL D8 – Information, Knowledge, and Uncertainty. This article reflects topics included in that code. There are several subfields of information economics. Information as signal has been described as a kind of negative measure of uncertainty.^[3] It includes complete and scientific knowledge as special cases. The first insights in information economics related to the economics of information goods.

Since the 1970s, there have been influential advances in the study of information asymmetries^[4] and their implications for contract theory, including market failure as a possibility.^[5]

Information economics is formally related to game theory as two different types of games that may apply, including games with perfect information,^[6]complete information,^[7] and incomplete information.^[8]Experimental and game-theory methods have been developed to model and test theories of information economics,^[9] including potential public-policy applications such as mechanism design to elicit information-sharing and otherwise welfare-enhancing behavior.^[10]

An example of game theory in practice would be if two potential employees are going for the same promotion at work and are conversing with their employer about the job. However, one employee may have more information about what the role would entail then the other.^[11] Whilst the less informed employee may be willing to accept a lower pay rise for the new job, the other may have more knowledge on what the role's hours and commitment would take and would expect a higher pay. This is a clear use of incomplete information to give one person the advantage in a given scenario. If they talk about the promotion with each other in a process called colluding there may be the expectation that both will have equally informed knowledge about the job. However the employee with more information may mis-inform the other one about the value of the job for the work that is involved and make the promotion appear less appealing and hence not worth it. This brings into action the incentives behind information economics and highlights non-cooperative games.^[11]

The starting point for economic analysis is the observation that information has economic value because it allows individuals to make choices that yield higher expected payoffs or expected utility than they would obtain from choices made in the absence of information. Data valuation is an emerging discipline that seeks to understand and measure the economic characteristics of information and data.^[12]

Much of the literature in information economics was originally inspired by Friedrich Hayek's "The Use of Knowledge in Society" on the uses of the price mechanism in allowing information decentralization to order the effective use of resources. ^[13] Although Hayek's work was intended to discredit the effectiveness of central planning agencies over a free market system, his proposal that price mechanisms communicate information about scarcity of goods inspired Abba Lerner, Tjalling Koopmans, Leonid Hurwicz, George Stigler and others to further develop the field of information economics. Next to market coordination through the price mechanism, transactions can also be executed within organizations. The information requirements of the transaction are the prime determinant for the actual (mix of) coordination mechanism(s) that we will observe.^[14]

Information asymmetry means that the parties in the interaction have different information, e.g. one party has more or better information than the other. Expecting the other side to have better information can lead to a change in behavior. The less informed party may try to prevent the other from taking advantage of him. This change in behavior may cause inefficiency. Examples of this problem are selection (adverse or advantageous) and moral hazard.

Adverse selection occurs when one side of the partnership has information the other does not and this can occur deliberately or by accident due to poor communication.^[15] A classic paper on adverse selection is George Akerlof's The Market for Lemons.^[16]

The most common example of the Lemons Market is in the automobile industry. As suggested by Akerlof, there are four car types that a buyer could consider.^[16] This includes choosing either a new or used car, and choosing a good or bad car, or Lemon as it is more commonly known. When considering the market options there is possibility of purchasing a new lemon car as there is a used good car.^[16] The uncertainty that arises from the probability of purchasing a lemon due to asymmetric information can cause the buyer to have doubts about the car's quality and inherent outcome when purchased.^[17] This same dilemma exists in a multitude of markets where sellers have an incentive to not disclose information about their product if it is poor quality due to knowledge that the average standard across the industry from good products existing will boost their selling power.^[16] The asymmetrical information known about the car's quality can lead to a breakdown in the automobile industry's overall efficiency.^[18] This is due to two reasons. Firstly, uncertainty between the buyers and sellers and secondly in the broader market where only sellers with below average vehicles will be willing to sell due to the reduced quality being represented.^[16] There are two primary solutions for adverse selection; signaling and screening.

Moral hazard includes a partnership between a principal and agent and occurs when the agent may change their behaviour or actions after a contract has been finalised which can cause adverse consequences for the principal.^[15]

Moral hazard is present when there is a change in the agent's behaviour after taking out insurance cover to protect them.^[19] For example, if someone purchased car insurance for their vehicle and afterwards held their responsibility to a lower standard by going over the speed limit for example or generally driving recklessly. The 2008 financial crisis is another example, where Mortgage-backed securities were formed through the collation of subprime mortgages and sold to investors without disclosing the risk involved.^[20] For moral hazard, contracting between principal and agent may be describable as a second best solution where payoffs alone are observable with information asymmetry.^[21] Insurance covers will often include a waiting period clause to refrain agents from changing their attitude.

Fluctuations in the availability and accuracy of information can induce some level of risk and uncertainty.

Risk is defined by the circumstances under which the probability of every outcome is known by the decision-making individual and that, among all possible outcomes, it is not fully certain which will occur.^[24] In contrast, uncertainty refers to the situation whereby the probability of every outcome is unknown and cannot be accurately estimated thus, individuals will often lack sufficient economic information to make an informed decision.^[24]

Risk attitude directly influences the behaviour of economic agents during decision-making under uncertainty by altering the individuals' perception towards the valuation and reliability of information within the market.^[25] Stakeholders, particularly managers, will often demonstrate different risk attitudes which dictate their decision-making towards a variety of investments.

Risk attitude is classified under three main categories: risk aversion, risk neutrality and risk-seeking dispositions.

Risk-averse managers have a tendency to prefer investments with a low degree of uncertainty that generates relatively lower expected returns, as opposed to those with a high degree of uncertainty that generates relatively higher expected returns.^[26] They are more likely to choose a decision with a guaranteed outcome that has minimal risk, even if that meant foregoing a payoff that is potentially higher.

يركز المديرون المحايدون للمخاطر بشكل أساسي على تعظيم العائد المتوقع بغض النظر عن مستوى المخاطر. هذا الحياد يغذي ميلهم إلى اتخاذ قرارات استثمارية محفوفة بالمخاطر فقط إذا كان العائد المحتمل أكبر من الخسائر المحتملة. في المقابل، يميل المديرون الباحثون عن المخاطر إلى تفضيل الاستثمارات ذات أعلى عائد محتمل، حتى لو كان ذلك يعني تحمل درجة أعلى من المخاطر.

إن شراء وبيع المعلومات يختلف عن شراء وبيع معظم السلع الأخرى. هناك ثلاثة عوامل تجعل اقتصاديات شراء وبيع المعلومات مختلفة عن اقتصاديات السلع المادية:

أولًا، المعلومات غير تنافسية ، ما يعني أن استهلاكها لا يمنع الآخرين من استهلاكها أيضًا. ومن الخصائص الأخرى التي تؤثر على أسواق المعلومات أن تكلفتها الحدية تكاد تكون معدومة . وهذا يعني أنه بمجرد وجود النسخة الأولى، يصبح إنتاج نسخة ثانية شبه معدوم التكلفة، ما يسهل بيعها مرارًا وتكرارًا. مع ذلك، يجعل هذا التسعير التقليدي القائم على التكلفة الحدية غير عملي تمامًا.

ثانيًا، لا يُعدّ الاستبعاد خاصية طبيعية للسلع المعلوماتية، مع أنه من الممكن إحداث استبعاد مصطنع. إلا أن طبيعة المعلومات تكمن في أنه إذا عُرفت، يصعب استبعاد الآخرين من استخدامها. ولأن المعلومات غالبًا ما تكون غير تنافسية وغير قابلة للاستبعاد، فإنها تُعتبر مثالًا على السلع العامة .

ثالثًا، يفتقر سوق المعلومات إلى الشفافية. بمعنى آخر، لتقييم المعلومات، يجب معرفتها مسبقًا، لذا يتطلب الأمر استثمارًا في تعلمها. لتقييم برنامج ما، يجب تعلم استخدامه؛ ولتقييم فيلم، يجب مشاهدته.

وقد شرح دي لونغ وفرومكين أهمية هذه الخصائص في كتابهما "الاقتصاد القادم" .

وصف كارل شابيرو وهال فاريان تأثير الشبكة (أو ما يُسمى بالتأثيرات الخارجية للشبكة ) بأنه اكتساب المنتجات قيمة إضافية من كل مستخدم إضافي لتلك السلعة أو الخدمة. ^{[ 27 ]} تُعد تأثيرات الشبكة تأثيرات خارجية تُوفر فائدة فورية عند انضمام مستخدم جديد إلى الشبكة، مما يزيد من حجمها. تعتمد القيمة الإجمالية للشبكة على إجمالي عدد المستخدمين، ولكنها لا تُحقق سوى فائدة هامشية للمستخدمين الجدد. يؤدي هذا إلى تأثير مباشر للشبكة عند تبني كل مستخدم للسلعة، مع زيادة الحافز على التبني مع تبني مستخدمين آخرين وانضمامهم إلى الشبكة. ^{[ 28 ]} أما التأثير غير المباشر للشبكة فيحدث عندما تستفيد السلع المُكملة من تبني المنتج الأولي. ^{[ 28 ]}

يتزايد حجم البيانات باستمرار وبمعدل هائل، إلا أن استخدام هذه البيانات أقل بكثير من معدل إنتاجها. ^{[ 29 ] [ 30 ]}

تُؤدي البيانات الجديدة إلى زيادة محتملة في المعلومات المُضللة أو غير الدقيقة، مما قد يُطغى على المعلومات الصحيحة. وتعود هذه الزيادة في المعلومات غير المُوثقة إلى سهولة إنشاء البيانات عبر الإنترنت ومجانيتها، مما يُعيق قدرة المستخدمين على إيجاد بيانات موثوقة ومُدققة. ^{[ 31 ]}

في عام 2001، مُنحت جائزة نوبل في الاقتصاد لجورج أكيرلوف ومايكل سبنس وجوزيف إي. ستيغليتز "لتحليلاتهم للأسواق ذات المعلومات غير المتماثلة". ^{[ 33 ]}

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