Abstract
While mainstream economic theory has been primarily concerned with the behavior of agents having complete information and perfect rationality, it is unlikely that either of these assumptions are valid in reality. This has led to the development of theories that incorporate bounded rationality and also to the study of the role of information in economic interactions (information economics). In particular, information asymmetry, where all the agents do not have access to the same information has aroused much attention, as it has potential to significantly distort economic outcomes resulting in the failure of the market mechanism. It is often assumed that having more data than others gives agents a relative advantage in their interactions. In this paper we consider the situation where agents differ in terms of the granularity (as well as the quantity) of the information that they can access. We investigate this in the framework of a model system comprising agents with bounded rationality competing for limited resources, viz., the minority game. We show that there is no simple relation between the amount of information available to an agent and its success as measured by payoffs received by it. In particular, an agent having access to a much coarser-grained information (that is also quantitatively less) than the rest of the population can have a relative advantage under certain conditions. Our work shows that the success of individual agents can depend crucially on the relative fraction of the population that uses information of a specific type.
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Acknowledgements
This work was supported in part by the IMSc Econophysics project (XII Plan) funded by the Department of Atomic Energy, Government of India.
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Kushal, A., Sasidevan, V., Sinha, S. (2017). Information Asymmetry and the Performance of Agents Competing for Limited Resources. In: Abergel, F., et al. Econophysics and Sociophysics: Recent Progress and Future Directions. New Economic Windows. Springer, Cham. https://doi.org/10.1007/978-3-319-47705-3_8
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DOI: https://doi.org/10.1007/978-3-319-47705-3_8
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