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Models of Equilibrium Pricing with Internalized Powers of Independent Judgment Based on Autonomy

Aoki, Takaaki (2000): Models of Equilibrium Pricing with Internalized Powers of Independent Judgment Based on Autonomy.

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Abstract

In this paper I want to describe one way of thinking about information. In effect, this paper relates to the notion that organizational or societal models of economic equilibrium incorporate a decision-making mechanism that is influenced by the independent judgment of each individual. This decision-making mechanism has nothing to do with the notion of acting to maximize one's expected utility under a set of exogenous prices or predictions, nor are the consequences of the decisions based on this mechanism related in any way to exogenous prices, predictions, or other parameters. In terms of information theory, the goal is to generate information and make more accurate predictions about a particular condition. However, the information itself can be fundamentally flawed. Another point is that information generated for this purpose has the feature of being irreversible. If communication is defined as a process of engaging in an economic activity while observing and analyzing information generated on the basis of the above mechanism, then it is worth considering whether communication so defined has any utility from an economic standpoint. To pursue this question, I will apply the concept postulated above to theories of economic organization and pricing, and also discuss the externality which information brings into an economy.

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