Imperfect information

The initial rejection of the efficient heat pump by many consumers may be well founded or not. In addition to the sound economic rationales for rejection, there may be market-impediment explanations. Consumers may have imperfect information and be unaware of the energy savings of new, efficient technologies. The transaction cost of accjuiring information and making an efficient choice may be just too high. Because of these impediments, households often fail to make investments that would actually save them money over time. 

To sum up, the factors that enable the supply side to fix prices above the marginal cost are (a) the imperfect agency relationship between the doctor (the agent) and the insurer (the principal) the prescriber may prefer the brand product, about which he or she has acquired knowledge and experience during the patent period (risk aversion), (b) the patient, and sometimes also the doctor, may have imperfect information on the quality of cheaper alternatives, and (c) the lack of incentives to change prescription habits (moral hazard). 

Rothschild, Michael, and Joseph Stiglitz. 1976. Equilibrium in Competitive Insurance Markets An Essay on the Economics of Imperfect Information. Quarterly Journal of Economics 90 (November) 629-49. 

The work of Pliny includes many subjects related to the chemical knowledge and industries of his time. But Pliny evidently had very little knowledge himself on such subjects and his accounts taken from other writers are frequently lacking in accuracy. Whether this inaccuracy was due to imperfect interpretation of his authorities, or to the fact that the earlier writers were themselves but imperfectly informed upon the subjects treated, it is not possible to say, though the latter is in all probability at least a contributing cause. It follows that many of the descriptions of technical operations as described leave much room for conjecture as to important details. 

Overall, our analysis indicated that construction delays and imperfect information make a production/investment cycle of the type commonly observed in commodity chemicals inherently unstable, particularly on the demand side. Once the system is thrown into disequilibrium, it is difficult (if not impossible) to bring it back into balance. 

Kreps, D. M., and Wilson, R. (1982), "Reputation and imperfect information," Journal of Economic Theory 27,253-79. 

Spontaneous or unsolicited ADRs reported postmarketing may contain limited, unclear or imperfect information. It is the responsibility of the manufacturer to try to obtain as much relevant information as possible so they can be clinically assessed, particularly those that are serious. 

Thus, imperfect information on the acoustic frequencies typically does not lead to large errors in calculated partition function ratios. 

Figure 4 shows a further test of the effect of imperfect information on the inferred source profiles. This time, random noise is added to the concentration profile before carrying out the inversion with Eq. (30), to test the ability of the method to cope with random errors in concentration measurement. Again, three scenarios are used the first is identical with scenario (1) above. The other two use (n, m) = (10, 5) and the full Dij as in scenario (2), but also add to each C a random error, uniformly distributed over the interval [ i and Fj, but the larger one leads to significant degradation in both profiles. 

Schwarz, A. and Wilde, L. (1979) Intervening in markets on the basis of imperfect information a legal and economic analysis. University of Pennsylvania Law Review, 127,630-82. 

Huber further indicates that a GDSS can help improve the unaided decision situation, which often suffers from imperfect information processing and suboptimal decision selection. 

Different alternative hypotheses or assessments are possible if evidence is imperfect in any way. A hypothesis may be imperfect if it is based on imperfect information. Imperfect information refers to information that is incomplete, inconclusive, unreliable, inconsistent, or uncertain. Any or aU of these alternate hypotheses may or may not be true. 

Poor information search, resulting in imperfect information... 

In economic theory, price influences buyer choice because price serves as an indicator of product or service cost. Assuming the buyer has perfect information concerning prices and wants satisfaction of comparable product alternatives, he or she can determine a product/service mix that maximizes satisfaction within a given budget constraint. However, lacking complete tmd accurate infoimation about the satisfaction associated with the alternative choices, the buyer assesses them on the basis of known information. Generally, one piece of information aveiilable to the buyer is a product s price. Other pieces of information about anticipated purchases are not always known, and buyers cannot be sure how reliable and complete this other information is. And because this other infoimation is not always available, buyers may be uncertain about their ability to predict how much they will be satisfied if they purchase the product. For example, if you buy a new car, you do not know what the relative incidence of car repairs will be for the new car until after some months or years of use. Ai a result of this imperfect information, buyers may use price both as an indicator of product cost as well as an indicator of quality (want satisfaction attributes). 

The above approach can be extended to the case of imperfect information (Raiffa 1968) by replacing in the above eqrration with the probability of event k (E ) given the imperfect sample information (7). This results in an expression for the expected value of sample information [EVSI(A ,/)], given that the decision maker wottld chose action before receiving this information ... 

There is an emerging body of literature that, on one hand, shows that deviations from Bayes rule can in fact be justified in certain cases from a normative view and, on the other hand, shows that these deviations may disappear when people are provided richer information or problems in more natural contexts. For example, drivers performing a simulated passing task combined their own observations of the driving environment with imperfect information provided by a collision-warning... 

Rea, S.A., Jr. (1981). "Workmen s Compensation and Occupational Safety Under Imperfect Information," American Economic Review 71(1) 80-93. 

It is commonly argued that these legal arrangements will ensure that safety is provided at the appropriate levels even if customers are imperfectly informed. This is because the costs of harm suffered by customers are transferred to the railroad. The railroad will be knowledgeable about the amount of preventive effort it is taking, and the effects on the probability and severities of accidents. Because the railroad bears both the costs of preventing accidents and the financial consequences when accidents occur, the amount of preventive effort will be optimal. However, this happy outcome is dependent on an assumption that the customer s disutility associated with the possibility of an accident is identical to the expected harm suffered in an accident. 

Inexperienced railroads may not be familiar with the accident cost consequences of decisions they make concerning the level of preventive effort. It is difficult, even for safety professionals, to predict the frequency and magnitude of accidents. It is even more difficult to infer how levels of preventive effort ameliorate the frequency and severity of accidents. New railroads face considerable uncertainty about accident costs, yet are very well aware of the costs of prevention which they incur in the present. It is intuitive that a railroad that ignores or downplays future accident costs when deciding on the level of preventive effort will supply too little safety. This situation also presupposes imperfect information. Customers who recognize that an inferior service is being provided will signal their desires to the new railroad. 

Market Power Imperfect Information Customer Rationality Railroad Myopia External Harm... 

Legal liability has already been discussed in some detail in the chapters dealing the market failures due to imperfect information and externalities. In the chapter on imperfect information, it was shown that liability will be insufficient to completely remove the market failure for passengers. This is because passengers will be risk averse. This is not to say that liability is bad and should not be deployed. Liability is a mechanism for spreading risk, and will reduce but not eliminate the market failure. The issue is less relevant for freight shippers, as they tend to be better informed than passengers. 

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