Re: Game theory saved the mainstream

[enilsson@xxxxxxxxxxxxxxx (Eric Nilsson)]

Doug H. writes,
>While we're at it, doesn't the "information assymmetry" stuff serve as a
>polite way for talking about power and conflict, without getting to messy?

But if it does introduce power, it does so in the typical mainstream fashion
-- through positing _exogenously_ determined initial endowments.  In this
case, it is assumed that individuals in certain market positions have more
of an endowment of information (or information-getting-technology) than others.

That is, when individuals face each other in markets, neither has more power
(can't force the other do change his/her behavior) but one has more of an
endowment for which he/she gets a return.

Interestingly, some private information (one person having information that
another doesn't) does _not_ suffer from the problems other endowments have
-- costly enforcement of property rights.  That is, I can steal your car,
factory, money but I probably can't steal your knowledge of particular
things (absent a truth serum I slip you when you are not looking).  I'm not
taking here about information like patents but information that does not
take physical form.  On the other hand, it might be that some economic
actors have information-getting-technology that permits them to discover
what information others have by these others' actions.  But getting this
information before the other acts might be impossible.

I would hold that capitalism is becoming increasingly based on the
importance of such private information for which property rights enforcement
becomes easier (and cheaper) than other types of property.

Eric Nilsson
Department of Economics
California State University, San Bernardino
enilsson@xxxxxxxxxxxxxxx
909-880-5564