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.[not verified in body]
Chess is an example of a game with perfect information as each player can see all of the pieces on the board at all times. Other examples of perfect games include Tic-tac-toe, Irensei, and Go. The formal definition can be easily extended to include games with exogenous uncertainty from chance events, such as in Backgammon, or simultaneous move games, such as in the iterated prisoners' dilemma, or both, such as in Goofspiel.
Card games where each player's cards are hidden from other players, as in contract bridge, are examples of games with imperfect information. In 2015 two-handed Texas hold'em with bounded bidding was essentially solved.
- Complete information
- Extensive form game
- Information asymmetry
- Partial knowledge
- Perfect competition
- Screening game
- Signaling game
- Osborne, M. J.; Rubinstein, A. (1994). "Chapter 6: Extensive Games with Perfect Information". A Course in Game Theory. Cambridge M.A.: The MIT Press. ISBN 0-262-65040-1.
- Thomas, L. C. (2003). Games, Theory and Applications. Mineola N.Y.: Dover Publications. p. 19. ISBN 0-486-43237-8.
- Osborne, M. J.; Rubinstein, A. (1994). "Chapter 11: Extensive Games with Imperfect Information". A Course in Game Theory. Cambridge M.A.: The MIT Press. ISBN 0-262-65040-1.
- Science, January 2015 article and report
- Fudenberg, D. and Tirole, J. (1993) Game Theory, MIT Press. (see Chapter 3, sect 2.2)
- Gibbons, R. (1992) A primer in game theory, Harvester-Wheatsheaf. (see Chapter 2)
- Luce, R.D. and Raiffa, H. (1957) Games and Decisions: Introduction and Critical Survey, Wiley & Sons (see Chapter 3, section 2)
- The Economics of Groundhog Day by economist D.W. MacKenzie, using the 1993 film Groundhog Day to argue that perfect information, and therefore perfect competition, is impossible.