Dictionary of Arguments

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Information, information theory: A character or a character combination contains information when it is clear to the recipient that this character or the character combination appears instead of another possible character or a possible character combination. The supply of possible characters determines to a part the probability of the occurrence of a character from this supply. In addition, the expected probability of the appearance of a character can be increased by already experienced experiences of regularities. The amount of information transmitted by a character depends on the improbability of the occurrence of the character.

Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Item Summary Meta data
Mause I 167f
Information Economics/Information/Asymmetry/Arrow: (1)(2)
Terminology: "principal" (seller, superior; holds more information) - "agent" (buyer, employee; holds less information).
Four possible constellations of information asymmetry:
1. Hidden action: the principal cannot fully observe the agent's actions after the contract is concluded. For example, an employee acquires a better level of information than the employer. ((s) See master-slave dialectic/Fukuyama).
Moral hazard (temptation): the employee can take advantage of this by reducing his work performance (shirking).
2. Hidden information: after conclusion of the contract, the principal is not in a position to adequately assess the work performance (quality) of the agent, as he himself lacks expertise. e.g. car repair, medical treatment errors. (3)
Mause I 168
3. Hidden characteristics: this is about the characteristics of the property to be sold.
This is an ex-ante information asymmetry. It is often found in used car markets (4) and insurance markets.
4. Hidden intention: asymmetric distribution of information before conclusion of contract: the principle has less information available in this case. Example: A trainee has the desire to switch to the competition right from the start.

1.K. J. Arrow, The economics of agency. In Principals and agents: The structure of business, Hrsg. John W. Pratt und Richard J. Zeckhauser, 37– 51. Boston 1985.
2.K. Spremann, Asymmetrische Information. Zeitschrift für Betriebswirtschaft 60 (5/ 6), 1990, S. 561– 586.
3 U. Dulleck, R. Kerschbamer, On doctors, mechanics, and computer specialists: The economics of credence goods. Journal of Economic Literature 44, (1) 2006, S. 5– 42.
4.G: A. Akerlof, The market for ‚Lemons‘: Quality uncertainty and the market mechanism. Quarterly Journal of Economics 84, (3), 1970, S. 488– 500.

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.

EconArrow I
Kenneth J. Arrow
Social Choice and Individual Values: Third Edition New Haven 2012

Mause I
Karsten Mause
Christian Müller
Klaus Schubert,
Politik und Wirtschaft: Ein integratives Kompendium Wiesbaden 2018

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