Tuesday, December 07, 2004


Hayekian wisdoms on the market for information

Richard Posner starts off his and Gary Beckers' blog with a comment on the market for blogging and information:

"Blogging is a major new social, political, and economic phenomenon. It is a
fresh and striking exemplification of Friedrich Hayek’s thesis that knowledge is
widely distributed among people and that the challenge to society is to create
mechanisms for pooling that knowledge."

Spontaneous order on a market for information then leaves it up to the consumers to evaluate the supply of information. Hence, what it comes down to is a form of coordination game, an n-person game depending on the establishment of common knowledge (see Aumann, R. 1976 "Agreeing to Disagree", Annals of Statistics, 4: 1236-1239).

This all comes down to the very core of economics, so eloquently put by Israel Kirzner ( 1990. "Self-Interest and the New Bashing of Economics", Critical Review 4 (1-2): 33):

"[T]he existence of systematic market forces means the existence of a spontaneous process of learning. What economic theory essentially sets out to explain, therefore, is how a spontaneous learning process can be set in motion by the interaction of exchanging individuals."

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