Information Demand and Procurement

Abstract

Information, as a commodity that is tradeable as an economic good, is not a par­ticular signal or message, but rather a set of potential signals or messages: an information structure. The decision on the optimal structure to possess, which Marschak (1971) terms the meta-decision, depends critically upon the available sources’ statistical properties, pragmatic uses, and comparative costs. With the costs of information moving into the foreground, Chapter 8 studies the meta-decision by viewing information as a differentiated commodity available for pur­chase. The chapter concentrates on the normative theory of information demand and procurement, deferring to Chapter 9 the discussion of practical and descrip­tive issues such as how individuals actually choose sources and how the design of the organization’s information system can influence those choices.