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Asymmetric information and economics

  • Frieden, B. Roy
  • Hawkins, Raymond J.
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    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S037843710900781X
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    Article provided by Elsevier in its journal Physica A: Statistical Mechanics and its Applications.

    Volume (Year): 389 (2010)
    Issue (Month): 2 ()
    Pages: 287-295

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    Handle: RePEc:eee:phsmap:v:389:y:2010:i:2:p:287-295
    Contact details of provider: Web page: http://www.journals.elsevier.com/physica-a-statistical-mechpplications/

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