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by ZeroGravitas 4662 days ago
Your response and the URL of your link refer to free markets, and they by definition require perfect information. The info at your link talks about something else.
2 comments

In particular, perfect information is required in order for the free market to allocate resources efficiently; if obtaining information has a cost, there are all sorts of fun ways to abuse that in order to break competition and misallocate resources. You can see this in the US cellphone industry - by increasing the complexity of their plans, cellphone providers have made it more expensive to comparison shop, meaning that customers (rationally) go with the first option rather than the lowest-cost one.

You can also see this with some of the smaller-scale Ponzis and investment scams - so long as the amount of money each investor has invested is much smaller than the amount it'd cost to investigate the investment, it's not rational for them to do so. One of the recent US Ponzis, Perma-Pave, actually failed because they got greedy and took on a large investor with reason to investigate what had happened to their money.

In this definition from Wikipedia, in the section on Microeconomics, it is claimed that perfect information is a physical impossibility.

Can you help me understand why free markets "by definition" require that which cannot exist?

http://en.wikipedia.org/wiki/Perfect_information

Oh, that's easy - free markets are an ideal that can't actually exist in the real world, in part because perfect information is impossible.
Much like democracy.
> Can you help me understand why free markets "by definition" require that which cannot exist?

Because, like "perfect information", "free markets" are an abstract conceptual ideal.

The same reason integrals require continuous functions, which also can't meaningfully exist: it's a mathematical model. Just because it can't possibly exist in the real world does not mean it's useless or even "wrong" per se.
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