Perfect information in economics is used to describe a subset of Perfect Competition.
With perfect information in a market, all consumers and producers are assumed to have perfect knowledge of price, utility, quality and production methods of products, when theorizing the systems of free markets, and effects of financial policies.
Perfect information is also a game situation in which an agent is theorized to have all relevant information with which to make a decision. It has implications for several fields.
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 and perfect information are importantly different. In a game of complete information, the structure of the game and the payoff functions of the players are commonly known but players may not see all of the moves made by other players (for instance, the initial placement of ships in Battleship); there may also be a chance element (as in most card games). Conversely, in games of perfect information, every player observes other players' moves, but may lack some information on others' payoffs, or on the structure of the game.
Games of incomplete information arise most frequently in social science rather than as games in the narrow sense. For instance, Harsanyi was motivated by consideration of arms control negotiations, where the players may be uncertain both of the capabilities of their opponents and of their desires and beliefs. Games of incomplete information can be converted into games of complete but imperfect information under the "common prior assumption." This assumption is commonly made for pragmatic reasons, but its justification remains controversial.
Complete Vs. Incomplete Information
In a game of complete information all players' are perfectly informed of all other players payoffs for all possible action profiles. Examples will be the Game of chicken, Prisoner's dilemma, chess, checkers etc. In all the above the players know about each others' utility function/payoffs. If instead a player is uncertain of the payoffs to other players the game is one of incomplete information. In an incomplete information setting players may not possess full information about their opponents. In particular players may possess private information that the others should take into account when forming expectations about how a player would behave. Examples would be situations such as buying auto insurance, playing blind poker etc.
1. What should a buyer know about the seller in order to make decisions?
2. What should the seller know about the seller to make seller
3. In India, what are the ways by which buyer and seller deceive?
4. What are the steps taken by Government to increase use of information / knowledge and awareness?
Just thinking on the above given points may take you to several issues related to modern markets. Do share your observations / opinions on this important issue.