Information costs

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Information costs are in the economics costs that a business entity must apply to the market participants that a decision relevant information to be able to obtain.

General

The compound information costs contains the term information as a word component, which represents knowledge about facts and processes in reality , which is used to prepare decisions. Information and data must be obtained , stored and processed , resulting in perfect and imperfect information . These three activities generate costs that must be borne by the decision maker. In doing so, he has to weigh up whether the costs are reasonable with regard to the information benefit. The use of information is understood to mean the change in the degree of target achievement that can be brought about by taking additional information into account when making a decision. He also has to consider whether information either already exists and then has to get from its source to the recipient or whether it has yet to be created through suitable measures (e.g. through research and development ). In both cases, both the organization of the allocation process (which information is needed where?) And the transport of the information over spatial and / or temporal distance implies the use of scarce resources and thus causes costs.

In the context of the information economy , George Stigler 's interest in the economic evaluation of information has come to the fore since 1961 . Since then, the information economy has formed a fourth sector alongside the traditional economic sectors of agriculture , industry and services . She examines the central phenomenon of information asymmetry and observes markets that are characterized by incomplete information, information costs and heterogeneous product qualities . Information costs arise due to unevenly distributed information (information asymmetries). The greater the information deficit, the higher the information costs and vice versa. The perfect market ( perfect capital market ), on the other hand, is based, among other things, on the premise that there are no information costs because there is perfect market transparency . However, economic agents must base their decisions on adequate information on the imperfect markets that exist in reality.

species

Information costs arise from the search , acquisition and use ( storage , processing , transmission ) of information in advance of a decision. That is why there are, on the one hand, the information costs that actually arise as pagatorial costs, such as telephone charges (for means of communication ) or for subscribing to a specialist journal or the report of an auditor (as information carrier ). If information is not obtained from own sources, it is often chargeable; in individual cases they can have very high purchase prices (such as tax evaders CDs for financial administration ). The Internet has reduced information costs extremely, at least in market segments and special situations. On the other hand, the correct (decision-relevant) information has to be filtered out by the decision maker from the multitude of additional information using time-consuming search processes, stored by means of allocation decisions and processed by IT . From a business point of view , the time required for this is considered to be opportunity costs , which are also part of the information costs . Part of the specialist literature also counts the so-called friction costs from suboptimal decisions, "which could be avoided by increasing the value of information in the course of standardization ", among the opportunity costs .

In this context, it can be assumed that around 30% of working time is spent looking for information and 40% of the time what is sought is not found.

Information costs for individual economic subjects

Because of different information preferences and priorities, economic agents have different information costs.

Companies

The use of communication media causes information costs , which are usually included in the fixed costs . The cost type of the information costs can be allocated to the causing area in the way of cost center accounting according to the causation principle . It should be noted that all operational functions cause information costs:

Not least in order to reduce information costs, to organize companies into interest groups . One of their most important tasks is to pass on information.

Country

The state can try a wide variety of measures to reduce the information costs of other economic agents. This is possible either if he is involved in transactions with other economic entities himself or if he reduces the mutual information costs of non-governmental economic entities.

Private households

Consumer organizations like Stiftung Warentest try to save consumers information costs. Where there is a lack of information, the market transparency for consumers is low, so that the degree of information can be improved through the - mostly free - Internet. The reliability of the Internet information can be problematic, as is evident from the ratings of doctors , hotels or restaurants . Information costs can pay fees for advice types such as investment advice , medical advice , employment - and career counseling , job service , educational counseling , drug counseling , partnership and marriage counseling , marriage preparation , energy advice , nutritional counseling , educational counseling , family counseling , finding processes , financial counseling , genetic counseling , consulting fees , individual psychological counseling, person-centered or client-centered counseling , life coaching , mediation , MPU counseling , psychological counseling , legal advice , rehabilitation counseling , pension counseling , debt counseling , school counseling and school guidance services , crisis pregnancy counseling , pastoral care , social counseling and social work counseling , Sociological consulting , Tax , student counseling , consumer counseling , transport counseling , Asset advice or insurance advice arise.

consequences

The information society incurs information costs because only part of the information is free. She needs this information to reduce or eliminate the risk of making a wrong decision . Information costs can therefore influence decisions. If the information costs are lower than the information value, the procurement of the relevant information is advantageous and vice versa. Information creates benefits until the information costs reach the information value . If the information costs increase, the probability distributions of the profit shift towards smaller amounts. Information costs tend to be lower for nominal goods and higher for real goods . When the money supply (nominal goods) expands, economic agents initially react with a shift in favor of the types of assets that cause the lowest information costs, so that the adjustments in finance are made relatively quickly. The information costs to be expended for market research are, for example, higher the more precisely the sales volume (real goods) is to be determined.

When the difference between the higher information value and information costs reaches its maximum, the decision is improved through risk reduction . However, if the decision maker wants to forego information because the information costs are too high, he accepts asymmetries that increase his risk of making a wrong decision. In this case, the information cost exceeds the information value.

Information costs are an important component of transaction costs , and it makes sense to separate them because information costs are usually incurred before a transaction and can also arise if a transaction does not take place (possibly because of the high information costs).

Individual evidence

  1. ↑ Wolfgang Lück / Erich Friese, Lexikon der Betriebswirtschaft , 1983, p. 539
  2. ^ Jacob Marschak , Remarks on the Economics of Information , in: Contributions to Scientific Research in Management, Cowles Foundation Paper 146, 1960, p. 80
  3. ^ Armen Alchian , Information Costs, Pricing, and Resource Unemployment , in: Edmund S. Phelps (Ed.), Microeconomic Foundations of Employment and Inflation Theory, 1970, pp. 27-52
  4. ↑ George Stigler, The Economics of Information , in: The Journal of Political Economy, Volume 3, 1961, pp. 213 ff.
  5. ↑ Michael Hopf, Information for Markets and Markets for Information , 1983, pp. 27 ff.
  6. ↑ Helmut Laux, Risk Sharing, Incentive and Capital Market , 1998, p. 105
  7. ↑ Harald von Kortzfleisch , Information and Communication in the Industrial Enterprise , in: Zeitschrift für Betriebswirtschaft (No. 8), 1973, p. 555
  8. ↑ Meinolf Lombino / Olaf Fischer, Economics for Bank Specialists : Briefly summarized everything relevant to the exam , 2010, p. 50
  9. ↑ The Internet economy is also concerned with the extent and procurement costs of information
  10. ↑ Dirk Knauer, Act Big - New Approaches for Information Management , 2015, p. 72 f.
  11. ↑ Klaus Peter Kaas, Market Information: Screening and Signaling Among Partners and Rivals , in: Zeitschrift für Betriebswirtschaft (No. 3), 1991, p. 358
  12. ↑ Peter Buxmann, Information Management in Networked Companies , 2001, p. 76
  13. ↑ Thomas C. Redman, Data Driven: Profiting from Your Most Important Business Asset , 2008, p. 42
  14. ↑ Bernhard Beck, Prosperity, Market and State: An Introduction to Economics , 2008, p. 92
  15. ↑ Helmut Laux, Decision Theory II , 1988, p. 82
  16. ↑ Helmut Laux, Decision Theory II , 1988, p. 93
  17. ^ Sigurd Klatt / Manfred Willms, structural change and macroeconomic control , 1975, p. 339