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Asymmetric Information and Ranked Information Are Equivalent in Making Information Utilization Heterogeneous

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  • Harashima, Taiji

Abstract

In information economics, any piece of information is assumed to have the same value across people, even if the information is distributed asymmetrically. However, in actuality, information has different values across people, even if it is distributed equally, because people utilize the same information differently and reach different conclusions with it. In this paper, I construct a model of heterogeneous information utilization by introducing the concept of ranked information. I conclude that the effects of asymmetric information and ranked information on economic activities are essentially equivalent. However, there are still some differences between them, and ranked information will be more economically important than asymmetric information. Furthermore, ranked information can cause an extreme economic inequality.

Suggested Citation

  • Harashima, Taiji, 2022. "Asymmetric Information and Ranked Information Are Equivalent in Making Information Utilization Heterogeneous," MPRA Paper 113576, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:113576
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    References listed on IDEAS

    as
    1. Joseph E. Stiglitz, 2002. "Information and the Change in the Paradigm in Economics," American Economic Review, American Economic Association, vol. 92(3), pages 460-501, June.
    2. Bruce C. Greenwald & Joseph E. Stiglitz, 1986. "Externalities in Economies with Imperfect Information and Incomplete Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 101(2), pages 229-264.
    3. Aaron S. Edlin & Joseph E. Stiglitz, 2008. "Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies," Springer Books, in: Roger D. Congleton & Kai A. Konrad & Arye L. Hillman (ed.), 40 Years of Research on Rent Seeking 2, pages 609-620, Springer.
    4. Robert A. Becker, 1980. "On the Long-Run Steady State in a Simple Dynamic Model of Equilibrium with Heterogeneous Households," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(2), pages 375-382.
    5. Joseph E. Stiglitz, 2017. "The Revolution of Information Economics: The Past and the Future," NBER Working Papers 23780, National Bureau of Economic Research, Inc.
    6. Harashima, Taiji, 2010. "Sustainable Heterogeneity: Inequality, Growth, and Social Welfare in a Heterogeneous Population," MPRA Paper 22521, University Library of Munich, Germany.
    7. Harashima, Taiji, 2009. "A Theory of Total Factor Productivity and the Convergence Hypothesis: Workers’ Innovations as an Essential Element," MPRA Paper 15508, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Asymmetric information; Economic inequality; Government intervention; Heterogeneity; Information retrieval; Ranking;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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