Asymmetric information and economics

We present an expression of the economic concept of asymmetric information with which it is possible to derive the dynamical laws of an economy. To illustrate the utility of this approach we show how the assumption of optimal information flow leads to a general class of investment strategies includi...

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Bibliographic Details
Published inPhysica A Vol. 389; no. 2; pp. 287 - 295
Main Authors Frieden, B. Roy, Hawkins, Raymond J.
Format Journal Article
LanguageEnglish
Published Elsevier B.V 15.01.2010
Subjects
[formula omitted] theory
Asymmetric information
Asymmetry
Economics
EPI
Fisher information
Formalism
Market efficiency
Markets
Optimization
Raw materials
Statistical mechanics
Utilities
Asymmetric information
Economics
89.70.+c
Q theory
89.65.Gh
Market efficiency
Fisher information
EPI
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Summary:We present an expression of the economic concept of asymmetric information with which it is possible to derive the dynamical laws of an economy. To illustrate the utility of this approach we show how the assumption of optimal information flow leads to a general class of investment strategies including the well-known Q theory of Tobin. Novel consequences of this formalism include a natural definition of market efficiency and an uncertainty principle relating capital stock and investment flow.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:0378-4371
1873-2119
DOI:10.1016/j.physa.2009.09.028