Complete information
Encyclopedia
Complete information is a term used in economics
and game theory
to describe an economic situation or game in which knowledge about other market participants or players is available to all participants. Every player knows the payoffs and strategies available to other players.
Complete information is one of the theoretical pre-conditions of an efficient perfectly competitive market
. In a sense it is a requirement of the assumption also made in economic theory that market participants act rationally. If a game is not of complete information, then the individual players would not be able to predict the effect that their actions would have on the others players (even if the actor presumed other players would act rationally).
are not identical. Complete information refers to a state of knowledge about the structure of the game and the objective functions of the players, while not necessarily having knowledge of actions inside the game. So for example, one may have complete information in the context of a Prisoner's Dilemma
, but nonetheless this is a game of imperfect information since one does not know the action of the other player. Despite this distinction, it is useful to remember that any game of incomplete information can be transformed, terminology-wise, into a complete, but imperfect, game via the Harsanyi transformation. This simply entails including nature as a player in the game and conditioning payoffs on nature's (unknown) moves.
s, is to define a game of incomplete information as any game in which nature moves first and to define a game of uncertain information as any game in which nature moves after the players have moved.
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
and game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
to describe an economic situation or game in which knowledge about other market participants or players is available to all participants. Every player knows the payoffs and strategies available to other players.
Complete information is one of the theoretical pre-conditions of an efficient perfectly competitive market
Perfect competition
In economic theory, perfect competition describes markets such that no participants are large enough to have the market power to set the price of a homogeneous product. Because the conditions for perfect competition are strict, there are few if any perfectly competitive markets...
. In a sense it is a requirement of the assumption also made in economic theory that market participants act rationally. If a game is not of complete information, then the individual players would not be able to predict the effect that their actions would have on the others players (even if the actor presumed other players would act rationally).
Complete vs. perfect information
Although similar, complete and perfect informationPerfect information
In game theory, perfect information describes the situation when a player has available the same information to determine all of the possible games as would be available at the end of the game....
are not identical. Complete information refers to a state of knowledge about the structure of the game and the objective functions of the players, while not necessarily having knowledge of actions inside the game. So for example, one may have complete information in the context of a Prisoner's Dilemma
Prisoner's dilemma
The prisoner’s dilemma is a canonical example of a game, analyzed in game theory that shows why two individuals might not cooperate, even if it appears that it is in their best interest to do so. It was originally framed by Merrill Flood and Melvin Dresher working at RAND in 1950. Albert W...
, but nonetheless this is a game of imperfect information since one does not know the action of the other player. Despite this distinction, it is useful to remember that any game of incomplete information can be transformed, terminology-wise, into a complete, but imperfect, game via the Harsanyi transformation. This simply entails including nature as a player in the game and conditioning payoffs on nature's (unknown) moves.
Certain information
A distinction is made by some authors of game theory literature between complete and certain information. In this context, complete information is used to describe a game in which all players know the type of all the other players, i.e. they know the payoffs and strategy spaces of the other players. Certain information is used to describe a game in which all players know exactly what game they are playing in the sense that they know what the payoff of playing a particular strategy will be given the strategies played by other players. An equivalent way of making the distinction, particularly helpful in the context of extensive form gameExtensive form game
An extensive-form game is a specification of a game in game theory, allowing explicit representation of a number of important aspects, like the sequencing of players' possible moves, their choices at every decision point, the information each player has about the other player's moves when he...
s, is to define a game of incomplete information as any game in which nature moves first and to define a game of uncertain information as any game in which nature moves after the players have moved.