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Public governance of information asymmetries--The gap between reality and economic theory

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  • Mann, Stefan
  • Wüstemann, Henry

Abstract

There are numerous situations where governments take action due to systematic information asymmetries in society, while economics textbooks do not offer an integrated theory to justify these interventions in terms of utility. This paper starts with a taxonomy of situations where governments try to correct for information asymmetries. A distinction is made between government interventions due to information asymmetries between market partners, within political markets and between the government and citizens. It is then shown that Public Choice Theory offers only few and Public Finance Theory not enough explanations for the prevalence of such government interventions. Further explanations for government actions are given by Institutional Economics and Cultural and Behavioural Economics. The latter will probably generate the best progress towards creating better explanations.

Suggested Citation

  • Mann, Stefan & Wüstemann, Henry, 2010. "Public governance of information asymmetries--The gap between reality and economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(2), pages 278-285, April.
    • Handle: RePEc:eee:soceco:v:39:y:2010:i:2:p:278-285
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    Citations

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    Cited by:

    1. Yuwen Lyu & Yuqing Peng & Hejian Liu & Ji-Jen Hwang, 2022. "Impact of Digital Economy on the Provision Efficiency for Public Health Services: Empirical Study of 31 Provinces in China," IJERPH, MDPI, vol. 19(10), pages 1-17, May.
    2. Lubk Claudia, 2017. "Information Asymmetries in the Communication Between Bureaucracy and Citizens," Wroclaw Review of Law, Administration & Economics, Sciendo, vol. 7(1), pages 145-153, June.
    3. Mann, Stefan, 2019. "Competitiveness of cattle breeding in Switzerland: the value of policies enabling informed decisions," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 8(3), December.

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