The Problem of Imperfect Information and Asymmetric Information

The Problem of Imperfect Information and Asymmetric Information The Problem of Imperfect Information and Asymmetric Information By: OpenStaxCollege Consider a purchase that many people make at important times in their lives: buying expensive jewelry In May 1994, Doree Lynn bought an expensive ring from a jeweler in Washington, D.C., which included an emerald that cost $14,500 Several years later, the emerald fractured Lynn took it to another jeweler who found that cracks in the emerald had been filled with an epoxy resin Lynn sued the original jeweler in 1997 for selling her a treated emerald without telling her, and won The case publicized a number of little-known facts about precious stones Most emeralds have internal flaws, and so they are soaked in clear oil or an epoxy resin to hide the flaws and make the color more deep and clear Clear oil can leak out over time, and epoxy resin can discolor with age or heat However, using clear oil or epoxy to “fill” emeralds is completely legal, as long as it is disclosed After Doree Lynn’s lawsuit, the NBC news show “Dateline” bought emeralds at four prominent jewelry stores in New York City in 1997 All the sales clerks at these stores, unaware that they were being recorded on a hidden camera, said the stones were untreated When the emeralds were tested at a laboratory, however, it was discovered they had all been treated with oil or epoxy Emeralds are not the only gemstones that are treated Diamonds, topaz, and tourmaline are also often irradiated to enhance colors The general rule is that all treatments to gemstones should be revealed, but often disclosure is not made As such, many buyers face a situation of asymmetric information, where the both parties involved in an economic transaction have an unequal amount of information (one party knows much more than the other) Many economic transactions are made in a situation of imperfect information, where either the buyer, the seller, or both, are less than 100% certain about the qualities of what is being bought and sold Also, the transaction may be characterized by asymmetric information, in which one party has more information than the other regarding the economic transaction Let’s begin with some examples of how imperfect information 1/11 The Problem of Imperfect Information and Asymmetric Information complicates transactions in goods, labor, and financial capital markets The presence of imperfect information can easily cause a decline in prices or quantities of products sold However, buyers and sellers also have incentives to create mechanisms that will allow them to make mutually beneficial transactions even in the face of imperfect information If you are unclear about the difference between asymmetric information and imperfect information, read the following Clear It Up feature What is the difference between imperfect and asymmetric information? For a market to reach equilibrium sellers and buyers must have full information about the product’s price and quality If there is limited information, then buyers and sellers may not be able to transact or will possibly make poor decisions Imperfect information refers to the situation where buyers and/or sellers not have all of the necessary information to make an informed decision about the price or quality of a product The term imperfect information simply means that not all the information necessary to make an informed decision is known to the buyers and/or sellers Asymmetric information is the condition where one party, either the buyer or the seller, has more information about the quality or price of the product than the other party In either case (imperfect or asymmetric information) buyers or sellers need remedies to make more informed decisions “Lemons” and Other Examples of Imperfect Information Consider Marvin, who is trying to decide whether to buy a used car Let’s assume that Marvin is truly clueless about what happens inside a car’s engine He is willing to some background research, like reading Consumer Reports or checking websites that offer information about makes and models of used cars and what they should cost He might pay a mechanic to inspect the car Even after devoting some money and time collecting information, however, Marvin still cannot be absolutely sure that he is buying a high-quality used car He knows that he might buy the car, drive it home, and use it for a few weeks before discovering that car is a “lemon,” which is slang for a defective product (especially a car) Imagine that Marvin shops for a used car and finds two that look very similar in terms of mileage, exterior appearances, and age One car costs $4,000, while the other car costs $4,600 Which car should Marvin buy? If Marvin was choosing in a world of perfect information, the answer would be simple: he should buy the cheaper car But Marvin is operating in a world of imperfect information, where the sellers likely know more about the car’s problems than he does, 2/11 The Problem of ...Postgraduate Journal of Aesthetics, Vol. 4, No. 1, April 2007 C AN A ESTHETIC T HEORIES OF A RT B E R ESCUED F ROM THE P ROBLEM OF A VANT -G ARDE AND O THER N ON -P ERCEPTUAL A RTWORKS ? – A N E XPLORATION OF N ON -P ERCEPTUAL A ESTHETIC P ROPERTIES . A NGHARAD S HAW U NIVERSITY OF N OTTINGHAM Proponents of the aesthetic theory of art advocate that the aesthetic domain encompasses all artworks. However, there is a belief that although much art falls under the aesthetic, there are some artworks that do not. Avant-garde artworks are offered as counterexamples to the aesthetic theory as they are artworks that reject the very idea of the aesthetic. This paper explains the idea of non-perceptual aesthetic properties and explores whether it can incorporate avant-garde artworks into the domain of the aesthetic. James Shelley, in his 2003 paper ‘The Problem of Non-Perceptual Art’, describes the problem as the inconsistency of the following three propositions: artworks necessarily have aesthetic properties that are relevant to their appreciation as artworks (proposition R); aesthetic properties necessarily depend, at least in part, on properties perceived by means of the five senses (proposition S); and there exist artworks that need not be perceived by means of the five senses to be appreciated as artworks (proposition X). 1 The aesthetic theory of art attempts to answer the question ‘what makes something a work of art?’ by supplying a general theory based upon aesthetic properties, which are properties that depend on properties perceived by the senses (propositions (R) and (S)). 1 Shelley (2003), p.363. A NGHARAD S HAW 29 Avant-garde works cause problems for aesthetic descriptions of artworks because properties other than those received by the five senses lead people to consider them art (proposition X). It is important to note that an interest in the way something looks is not necessarily an aesthetic interest. For example, to look at an artwork to see whether it is a painting or a collage is to take a non-aesthetic interest in it. It is not this sort of interest we are concerned with when discussing properties relevant to the appreciation of objects as artworks. Aesthetic theories of art focus upon artworks necessarily having aesthetic properties that are relevant to their appreciation as artworks. One of the earliest examples of the avant-garde, or non-perceptual art, is Marcel Duchamp’s Fountain: an existing urinal placed in a gallery in 1917. Among the most philosophically interesting things about this work are the facts that: (a) many people consider Fountain a work of art; (b) it was intended to make a statement rather than be appreciated for its aesthetic qualities; (c) the fact that it is specifically a urinal has no impact upon the work (it could be any object that achieves the same effect); (d) a description of the work is sufficient to appreciate it as an artwork; and (e) there exist many identical urinals that are not considered to be artworks. Several attempts have been made to confront the problem of avant-garde artworks and rescue aesthetic theories of art. An obvious reaction is to deny that works such as Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Essays on the information contents of bank subordinated debt spreads and the pricings of bank loa Pornrojnangkool, Thanavut ProQuest Dissertations and Theses; 2007; ProQuest Central pg. n/a Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Reproduced with permission of the copyright owner. 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[...]... with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced... with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced... with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced... with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permission of the copyright owner Further reproduction prohibited without permission Reproduced... with permission of the copyright owner Further reproduction prohibited without permission Reproduced with permissiREVIE W Open Access A comparative approach for the investigation of biological information processing: An examination of the structure and function of computer hard drives and DNA David J D’Onofrio 1,2* , Gary An 3 * Correspondence: davidj@email. phoenix.edu 1 College of Arts and Science, Math Department, University of Phoenix, 5480 Corporate Drive, Suite 240, Troy, Michigan, 48098, USA Abstract Background: The robust storage, updating and utilization of information are necessary for the maintenance and perpetuation of dynamic systems. These systems can exist as constructs of metal-oxide semiconductors and silicon, as in a digital computer, or in the “wetware” of organic compounds, proteins and nucleic acids that make up biological organisms. We propose that there are essential functional properties of centralized information-processing systems; for digital computers these properties reside in the computer’s hard drive, and for eukaryotic cells they are manifest in the DNA and associated structures. Methods: Presented herein is a descriptive framework that compares DNA and its associated proteins and sub-nuclear structure with the structure and function of the computer hard drive. We identify four essential properties of information for a centralized storage and processing system: (1) orthogonal uniqueness, (2) low level formatting, (3) high level formatting and (4) translation of stored to usable form. The corresponding aspects of the DNA compl ex and a computer hard drive are categorized using this classification. This is intended to demonstrate a functional equivalence between the components of the two systems, and thus the systems themselves. Results: Both the DNA complex and the computer hard drive contain components that fulfill the essential properties of a centralized information storage and processing system. The functional equivalence of these components provides insight into both the design process of engineered systems and the evolved solutions addressing similar system requirements. However, there are points where the comparison breaks down, particularly when there are externally imposed information-organizing structures on the computer hard drive. A specific example of this is the imposition of the File Allocation Table (FAT) during high level formatting of the computer hard drive and the subsequent loading of an operating system (OS). Biological systems do not have an external source for a map of their stored information or for an operational instruction set; rather, they must contain an organizational template conserved within their intra-nuclear architecture that “manipulates” the laws of chemistry and physics into a highly robust instruction set. We propose that the epigenetic structure of the intra-nuclear environment and the non-coding RNA may play the roles of a Biological File Allocation Table (BFAT) and biological operating system (Bio-OS) in eukaryotic cells. D’Onofrio and An Theoretical Biology and Medical Modelling 2010, 7:3 http://www.tbiomed.com/content/7/1/3 © 2010 D’Onofrio and An; licensee BioMed Central Ltd. This is an Open Access arti cle distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any me dium, pr ovided the original work is properly cited. Conclusions: The comparison of functional and structural characteristics of the DNA complex and the computer hard drive leads to a new descriptive paradigm that identifies the DNA as a dynamic storage system of biological information. This system is embodied in an autonomous operating system that inductively follows organizational structures, data hierarchy and executable operations that are well understood in the computer science industry. Characterizing the “DNA hard drive” in this fashion can lead to insights arising from discrepancies in the descriptive framework, particularly with respect to positing the role of ... car’s problems than he does, 2/11 The Problem of Imperfect Information and Asymmetric Information and have an incentive to hide the information After all, the more problems that are disclosed, the. .. improved information to affect the quantity of high-quality emeralds sold on the website? 10/11 The Problem of Imperfect Information and Asymmetric Information Problem Using [link], sketch the effects.. .The Problem of Imperfect Information and Asymmetric Information complicates transactions in goods, labor, and financial capital markets The presence of imperfect information can