Economics and Information: Asymmetries, Uncertainties and Risks

Abstract

Since the publication of Hayek’s influential contribution (American Economic Review 35: 519–530, 1945) on the mechanism of market prices as a system of messages to exchange information and coordinate decisions in a decentralised system, economic theory has developed analyses and models on the value of information and on mechanisms to share relevant information between economic agents. Remarkable research has been devoted to the identification of information problems that generate economic inefficiency—and therefore loss of welfare. Likely, one of the most known works in this direction is Akerlof’s (Quarterly Journal of Economics 84: 488–500, 1970), who has showed the existence of asymmetric information between both parts of a market, buyers and sellers. This asymmetry breaks the efficiency of the market mechanism. This chapter introduces those concepts developed by economists on the relevance of information problems in economic activity. Moreover, it also presents the economic institutions that have arisen to solve or alleviate these problems such as guarantees, public records, contracts clauses, and so on.

I wish gratefully to acknowledge the comments by Marta García Morcillo, Cristina Rosillo-López, Guadalupe Valera, the participants in the workshop “Managing Asymmetric Information in The Roman Economy” and the two anonymous referees. The financial support from grant ECO 2017–86,245-P Plan Nacional de Investigación. Ministerio de Economía y Competitividad is also acknowledged. The remaining errors are my own responsibility.