World Library  
Flag as Inappropriate
Email this Article

Dispersed knowledge

Article Id: WHEBN0000221284
Reproduction Date:

Title: Dispersed knowledge  
Author: World Heritage Encyclopedia
Language: English
Subject: Friedrich Hayek, The Fatal Conceit, Dollar voting, Local knowledge problem, Austrian School
Collection: Austrian School, Economics Terminology, Friedrich Hayek, Information Economics, Knowledge
Publisher: World Heritage Encyclopedia

Dispersed knowledge

In economics, dispersed knowledge is knowledge, concerning all of the factors which influence prices and production throughout the economic system, that no single agent possesses.


  • Overview 1
  • Criticism 2
  • See also 3
  • References 4


Each agent in a market for assets, goods, or services possesses incomplete knowledge as to most of the factors which affect prices in that market. For example, no agent has full information as to other agents' budgets, preferences, resources or technologies, not to mention their plans for the future and numerous other factors which affect prices in those markets.[1]

Market prices are the result of price discovery, in which each agent participating in the market makes use of its current knowledge and plans to decide on the prices and quantities at which it chooses to transact. The resulting prices and quantities of transactions may be said to reflect the current state of knowledge of the agents currently in the market, even though no single agent commands information as to the entire set of such knowledge.[2]

Some economists believe that market transactions provide the basis for a society to benefit from the knowledge that is dispersed among its constituent agents. For example, in his Principles of Political Economy, John Stuart Mill states that one of the justifications for a laissez faire government policy is his belief that self-interested individuals throughout the economy, acting independently, can make better use of dispersed knowledge than could the best possible government agency.[3]


Karl Marx believed that market profits entail "cheating, deceit, inside knowledge, skill and a thousand favourable market opportunities" and that market prices do not reflect the true values of the underlying commodities and assets.[4]

See also


  1. ^ Hayek, Friedrich (1973). Law, Legislation and Liberty. University of Chicago Press. pp. 11–16, 42, 51.  
  2. ^ Menger, Carl (English Translation 1963). Problems of Economics and Sociology. University of Illinois Press (1963). 
  3. ^ Mill, John Stuart (1848). Principles of Political Economy. 
  4. ^ Marx, Karl (1894). Capital. Vol. III, Part 7, Ch. 48. 

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.