outline_ch11 - Chapter 11: The Economics of Information I....

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Unformatted text preview: Chapter 11: The Economics of Information I. The Importance of Information The invisible hand theory assumes perfect information What goods and services are available What prices they sell for The quality of the goods and services Etc. In reality, no one is fully informed! Perfect Information Perfect Information But information on availability, price or quality can be costly or impossible to obtain So markets with imperfect information function differently! I. How the Intermediary Adds Value Middlemen add Value: locate market matches and certify quality Consumers must often rely on information from others Sales agents or middlemen Provide the service of gathering information Make it available to people who can use it Consumers trade off: Benefits from search: lower price, more suitable choice Costs of search: less time and money Middlemen add Value: locate market matches and certify quality Spets, such as real estate agents, are...
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This note was uploaded on 07/20/2009 for the course PHYS physics 10 taught by Professor Goatman during the Spring '08 term at The University of British Columbia.

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outline_ch11 - Chapter 11: The Economics of Information I....

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