Marco to the Information Seekers...
Hi all,
I found interesting the definition provided by Roger:
> > INFORMATION is a measure of the ability to influence reality.
but I did not say why. The reason is that I've read lately an article about
the Nobel award 2001 that IMO points to the same direction.
The Nobel Award 2001 in Economic Sciences has been assigned to three
American economists (Akerlof, Spence and Stigliz), "for their analyses of
markets with asymmetric information" (see below). In few words they have
analyzed how a different quantity and/or quality of information in the hand
of one of the actors impacts the market.
Actually, the studies confirm the well known point that knowledge is power.
But, as you see, they use the term information, and not knowledge. I guess
the two terms are to a certain extent interchangeable, even if knowledge is
a bit more generic while information is more specific. Anyway, it seems
clear that the Roger's definition is not misused, as actually who holds
better information can influence the market. So I don't drop it.
After Horse's post about Noise, I like the Noise/DQ and Data/SQ
equivalences. Then, I'd say that information is a set of data we decide to
use for influencing reality. In other words, among all the available data
(i.e. among all the static patterns of Quality we are made of), we can call
information those we really use. And, finally, isn't life just the
possibility to create information from data?
Ciao,
Marco
p.s.
IMO another interesting offspring of the "Asymmetric information" theory is
about the (in)famous never ending thread about the free-market and a
possible intellectual superiority over the social level. On one side, we
have the pure capitalism supporters, well convinced that no intellectual
pattern should influence the market freedom. On the other side, a lot of
critical voices on capitalism hold the necessity of helping the third world,
despite the evidence that usually concrete helps get wasted. Well, I'm not
an economist, but I think that from these studies comes out that if we want
really to have a free and fair market, we should supply the weak economies
with information, even before than giving them money or other goods. In
other words, it's a chimera to state that intellect should not influence the
market as information (often made of scientific copyrighted data about the
goods) is already a terrific weapon in the hands of the strongest economies.
By the way, one of those economists, Joseph Stiglitz, apparently has been
forced to resign from the IMF for his ideas.....
Buon 2002 !
===========
Markets with asymmetric information
(from: http://www.nobel.se/economics/laureates/2001/press.html)
Many markets are characterized by asymmetric information: actors on one side
of the market have much better information than those on the other.
Borrowers know more than lenders about their repayment prospects, managers
and boards know more than shareholders about the firm's profitability, and
prospective clients know more than insurance companies about their accident
risk. During the 1970s, this year's Laureates laid the foundation for a
general theory of markets with asymmetric information. Applications have
been abundant, ranging from traditional agricultural markets to modern
financial markets. The Laureates' contributions form the core of modern
information economics.
George Akerlof demonstrated how a market where sellers have more information
than buyers about product quality can contract into an adverse selection of
low-quality products. He also pointed out that informational problems are
commonplace and important. Akerlof's pioneering contribution thus showed how
asymmetric information of borrowers and lenders may explain skyrocketing
borrowing rates on local Third World markets; but it also dealt with the
difficulties for the elderly to find individual medical insurance and with
labour-market discrimination of minorities.
Michael Spence identified an important form of adjustment by individual
market participants, where the better informed take costly actions in an
attempt to improve on their market outcome by credibly transmitting
information to the poorly informed. Spence showed when such signaling will
actually work. While his own research emphasized education as a productivity
signal in job markets, subsequent research has suggested many other
applications, e.g., how firms may use dividends to signal their
profitability to agents in the stock market.
Joseph Stiglitz clarified the opposite type of market adjustment, where
poorly informed agents extract information from the better informed, such as
the screening performed by insurance companies dividing customers into risk
classes by offering a menu of contracts where higher deductibles can be
exchanged for significantly lower premiums. In a number of contributions
about different markets, Stiglitz has shown that asymmetric information can
provide the key to understanding many observed market phenomena, including
unemployment and credit rationing.
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