|Sunstein I 118
Knowledge/Friedrich Hayek/Sunstein: In his essay "The Use of Knowledge in Society" Hayek writes that the great advantage of prices is that they reflect both information and people's tastes, which is much more than planning or planned economy could achieve. According to Hayek, the information is distributed to individuals in the form of incomplete and often contradictory fragments of knowledge. (1)
Sunstein: the knowledge of course includes facts about the product, but also about customer preferences.
Sunstein I 119
Knowledge/Hayek: the knowledge contained in the prices exceeds that of the best experts.
Prices/Hayek: in this context, Hayek underlines the importance of prices being in motion. Small movements produce the complete economic picture, which is overlooked by many economists according to Hayek.
Sunstein I 120
In particular, prices react to new information.
1. Friedrich Hayek, “The Use of Knowledge in Society,” American Economic Review 35 (1945): 519, reprinted in The Essence of Hayek, ed. Chiaki Nishiyama and Kurt Leube (Stanford: Hoover, 1984), 211. A superb treatment of Hayek’s thought is Bruce Caldwell, Hayek’s Challenge: An Intellectual Biography of F. A. Hayek (Chicago: University of Chicago Press, 2004)._____________Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. The note [Author1]Vs[Author2] or [Author]Vs[term] is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Friedrich A. Hayek
The Road to Serfdom: Text and Documents--The Definitive Edition (The Collected Works of F. A. Hayek, Volume 2) Chicago 2007
Cass R. Sunstein
Infotopia: How Many Minds Produce Knowledge Oxford 2008
Cass R. Sunstein
#Republic: Divided Democracy in the Age of Social Media Princeton 2017