An Introduction to Economics of Information Biasing (EIB)
affiliation not provided to SSRN
January 15, 2008
The information economics and much of its relevant economic literatures consider information as given parameter of economic systems. The Economics of Information Biasing (EIB) is based on information asymmetry however, focuses on information sharing strategies of individuals and their impact on institutions and human values. Although information asymmetry results in market failure but information biasing causes spreading of market. A social or economic problem can be subjectively modeled as an information biasing chain where individuals are positioned in different abstract coalitions along the chain according to interdependence of their payoff functions. The concept of coalition is a meeting point of methodological individualism and institutions since institutions do not matter within a coalition but they do matter when the coalitions interact. The upper level coalitions of the biasing chain virtually control the institutions and they have greater influences on our economy. A biasing chain constitutes a values framework. The solution of many economic, social and ecological problems that are yet challenges to our policy makers may require our existing values framework to improve.
Keywords: coalition, games theory, institutional economics, transaction cost, bounded rationality, rational choice theory, values, Pareto improvement
JEL Classification: B15, B19, B25, B41, B52, C79, D80, D82, E11, E19
Date posted: June 16, 2008 ; Last revised: August 6, 2012