The world's funniest economics stories

Chapter 22 Know Yourself, Know Your Enemy, and Win Every Battle, the Bargaining Chip That Influences Decision-Making (1)——
information economics

1. Seven words can really be worth 500 million dollars--Information Economics

At the beginning of 1950, the U.S. China Policy Research Office received a secret intelligence: There was a "Delin Software Company" in Europe, and a group of world-class experts gathered a group of world-class experts to study a project called "If the United States sends troops to North Korea, what is China's attitude?" subject.It is said that this result has only one sentence, but the asking price is 500 million US dollars.The United States laughed it off and didn't take it seriously.

During the Korean War, the U.S. experienced failure for the first time in the use of foreign troops, and began to debate the question of "whether it is really necessary to send troops to North Korea". In order to make sense in the debate in Congress, the opposition Republican Party still bought this outdated result for $280 million. The conclusion of this research result is only seven words: "China will send troops to North Korea."

Of course, there are 328 pages of analysis materials as an appendix after this sentence. The appendix analyzes China’s national conditions in detail, and based on extremely rich historical materials and data analysis, it convincingly proves that China is absolutely not Will sit back and watch North Korea's crisis without saving it.It also predicted that once China sends troops, the United States will withdraw from the war with its tail tucked in a disgraceful gesture.As long as there is a tie, the United States is considered a loser.

History has finally confirmed that the prophecy of Delin's company is very accurate.When General MacArthur was asked by a reporter "what do you think of the research results of the Delin Company", he shrugged dejectedly and said: "Our biggest mistake is that we are willing to pay tens of billions of dollars and hundreds of thousands of American military lives. The heavy price, but stingy with a mere $500 million worth of a fighter jet!"

Since then, "a sentence with an asking price of 500 million U.S. dollars" has become a wonderful commentary on the famous saying "wisdom is wealth".

Seven words were exchanged for 500 million US dollars, which shows the importance of information economics.

Information economics originated in the 20s, developed in the 40s and 50s, and basically matured in the 60s.In the initial stage of establishment, the research focus was various, some scholars focused on basic theoretical research, some scholars focused on applied research, and it was the mutual complementation and mutual promotion of these two researches that laid the theoretical foundation of information economics .

After entering the 70s, the development of information economics has basically reached maturity, which is marked by the publication of a large number of treatises on information economics.For example, "Information Economics" by Horowitz in the United States, "Information Economics-Standards for Calculating Costs and Benefits" by Wilkinson in the United Kingdom, and "Information Economics" by Yoneji Soda in Japan.

Information economics mainly studies seven aspects, the economic function of information; the cost and value of information; the economic effect of information; the structure of information industry; information system; information technology; information economic theory.

In the above short story, if the United States did not buy these seven characters at a price of 500 million U.S. dollars, I believe they would lose a large part of their initiative on the Korean battlefield. Since then, and even now, among the thousands of official and private think tanks in the United States, During has always occupied the leading position in the political and military circles.Delin's economic income also mainly comes from the government.

There are two main lines of research in information economics: one is macro-information economics founded by Fritz Macloop and Mark Uri Porat; Western information economics and micro information economics.

Macro-information economics was founded by Mark Lup of Princeton University and Porat of Stanford University. It regards the information industry as the fourth industry in agriculture, industry and service industry, and uses statistics and quantitative analysis to illustrate the information economy. It is an inevitable requirement and inevitable result of the development of the information industry and the information economy.

Micro information economics, also known as theoretical information economics, refers to rethinking the arguments and propositions put forward by traditional economics under the assumption of complete information, starting from the basic fact of asymmetric information distribution.These issues include market mechanisms, resource allocation, competitive equilibrium, statistical decision-making, principal-agent, risk and uncertainty, adverse choice, and moral hazard.Mainly taking individual market entities as the basic analysis unit, researching the impact of information on a series of microeconomic issues such as market equilibrium, labor market supply, consumer behavior, and market mechanisms, and analyzing information resource allocation and micro information market efficiency issues.

Applied research on information economics, although micro information economics is also called theoretical information economics, its applied research is not simply equivalent to macro information economics.

In the past two years, the application research of micro-information economics has played an important role in institutional arrangements and market norms during my country's economic reform and transition period, and it is a promising research field of information economics.

As mentioned earlier, micro-information economics is the study of how to seek a contract and system to arrange and regulate the economic behavior of both parties under the condition of uncertainty and asymmetric information. It is also called asymmetric information economics or contract theory.Under this premise, the result of any economic behavior is certain and unique.

Therefore, the task of microeconomics is to optimize the decision-making problem, that is, how to achieve the optimal allocation of resources and maximize efficiency.Moreover, it has formed many effective analysis methods in its own development, which makes micro-information economics more practical than traditional economics, and can study and solve practical economic problems more extensively and deeply.

2. Why did Wang Xizhi become the "East Bed's Quick Son-in-Law" -- information symmetry
The name of Wang Xizhi, a great calligrapher of a generation, is known to almost all women and children.But when it comes to "east bed with flat belly", how many people know its relationship with Wang Xizhi?
"East bed with a flat belly" refers to Chenglong's quick son-in-law. In fact, the word Chenglong's quick son-in-law comes from Wang Xizhi's "Dongbed with a flat belly".

During the Jin Dynasty, Prime Minister Wang Dao and Taifu Xijian were good friends, and they were officials in the same dynasty.One day, Xi Jian came to Wang Dao's house and told Wang Dao that he intended to find a son-in-law in his house, and Wang Dao readily agreed.So, on the second day, Xi Jian sent his disciples to Wang Dao's mansion to choose for him.

The disciples came to the East Chamber and asked the Wang family's children to get together and have a serious look at each other.When he returned, the student reported to Xi Jian: "The young men of the Wang family are very good, and it is difficult to distinguish between them. However, I heard that you are going to choose a son-in-law. They are all well-dressed and reserved. They hope to be selected. There is only one young man. Lying on the bed on the east side, with his clothes open and his belly exposed, he didn't care, as if he didn't know that you were going to choose a son-in-law." After hearing this, Xi Jian said happily, "This man is exactly the one I want to choose as a son-in-law." So Xi Jian betrothed his daughter to this man.The person lying on the bed is Wang Xizhi, who will become a great calligrapher in the future.

This story has been widely circulated as a good story, and gradually, people called other people's good son-in-law "the son-in-law of the east bed".

One who has the courage to show his truest side to others, and one who can recognize people with discerning eyes. The tacit understanding between Wang Xizhi and Xi Jian led to a beautiful marriage and left a good story in the world.Thinking deeply and analyzing with economic knowledge, the tacit understanding between Wang Xizhi and Xi Jian is a kind of information symmetry.

Information symmetry means that relevant information is shared by all parties involved in the transaction.Under market conditions, in order to achieve fair transactions, the information held by both parties must be symmetrical.In other words, if one party has a lot of information and the other party has less information, and the two are not "symmetrical", the deal cannot be done; or even if it is done, it is likely to be an unfair deal.

In real economic activities, information asymmetry is very common.The impact of information asymmetry can sometimes cause an imbalance in the market. When the market allocates resources, there will be a large gap in interests due to the disparity in the amount of information.

In addition, in the process of purchasing goods, people's cognition of individual information of goods will also produce asymmetry.Often, sellers have more information about traded items than buyers.Moreover, the detection of some products cannot be detected by the naked eye at the first time.Such as cigarettes, wine, canned food, etc., these things are different inside and out, and it is difficult to know whether they are good or bad at the first time when buying them.For these products, the seller obviously knows the actual situation of the product better than the buyer.

In addition to production and management, we can also feel the existence of information asymmetry everywhere in life.For example, if you work twice as hard every day, but the boss who is supposed to pay you more based on your good performance has only a vague idea of ​​how hard you work, then your bonus is only a small part of your salary.The boss doesn't fully see your efforts, so he can't tie your salary to performance in this information asymmetry situation.

However, in the face of a large number of information asymmetry problems in life, smart people can always come up with favorable solutions to improve the quality of information or reduce losses caused by information asymmetry.

For example, when you want to buy a second-hand car, but at the same time you don’t know the quality and performance of the second-hand car, you can find a knowledgeable friend to consult, or browse relevant information on the Internet, and refer to relevant books on the market to make a decision. A reasonable choice.

It can be said that in the rapidly developing modern society, the amount of information determines the right or wrong of individual decision-making, and the level of information transparency directly affects the level of social efficiency.Throughout the development of individuals and society, although the phenomenon of information monopoly still exists, only by continuously improving the ability to obtain information, increasing the channels for obtaining information, and possessing a wise and rational mind, can we reduce the impact caused by information asymmetry. loss.

Information asymmetry means that each person in a transaction has different information.In general, sellers have more information about traded items than buyers, but the reverse can also exist.An example of the former can be seen in the sale of used cars, where the seller knows more about the vehicle than the buyer.An example of the latter is health insurance, where the buyer usually has more information.Asymmetric information can lead to adverse selection.

Information Economics Traditional economics believes that prices condense all market information, and its acquisition requires no cost, so it can be freely used by all market participants. In this way, market participants have complete information on market operations.Information economics believes that the price is obtained in the search, at the cost of paying the cost, so the information is incomplete.Information economics reveals that prices cannot cover all market economic relations. Therefore, the market price system is no longer the entire content and means of incentives and constraints, and the "non-price" mechanism has become an indispensable content of incentives and constraints.

3. I have known you for a long time - information asymmetry

In one army, Jim and his team of seven, as trainees of Halley's instructor, started a three-month military quality training under the leadership of Halley.Jim is a shy young man. Every time the 7 teammates around him always have a good chat with Harley during the break, he just shows a few teeth, smiles slightly, and doesn't speak.But Jim is very hardworking in training.He hopes that in the near future, he can also rely on his excellent military qualities to become a leader and commander in the army and take root in the barracks.

During the days of training in the army, the hard-working Jim has indeed improved a lot.In every qualifying test and competition, Jim performed very well.However, a teammate around him told him that too much performance would make him "popular", and he would be easily calculated.

(End of this chapter)