Asymmetric information and economics
Abstract
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.
- Publication:
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Physica A Statistical Mechanics and its Applications
- Pub Date:
- January 2010
- DOI:
- Bibcode:
- 2010PhyA..389..287F