Perfect information is a term used in economics and game theory to describe a state of complete knowledge about the actions of other players that is instantaneously updated as new information arises. Economics (from the Greek οίκος [oikos], house, and νομος [nomos], rule, hence household management) is a social science that studies the production, distribution, trade and consumption of goods and services. ... Game theory is a branch of applied mathematics that studies strategic situations where players choose different actions in an attempt to maximize their returns. ...

Chess is the canonical example of a game with perfect information, in contrast to, for example, the prisoner's dilemma. Chess is an abstract strategy board game for two players. ... Many points in this article may be difficult to understand without a background in the elementary concepts of game theory. ...

In economics, a state of perfect information is required for a completely free market to function. That is, assuming that all factors are rational and have perfect information, they will choose the best products, and the market will reward those who make the best products with higher sales. Perfect information would practically mean that all consumers know all things, about all products, at all times, and therefore always make the best decision regarding purchase. A free market is an idealized market, where all economic decisions and actions by individuals regarding transfer of money, goods, and services are voluntary, and are therefore devoid of coercion and theft (some definitions of coercion are inclusive of theft). Colloquially and loosely, a free market economy is an economy... In economics and game theory, the participants are sometimes considered to have perfect rationality: that is, they always act in a rational way, and are capable of arbitrarily complex deductions towards that end. ...

It is law of sociology that perfect information does not exist, and cannot totally exist, due to the presence of deception. For example, a crooked used-car salesman could sell a consumer a car that he knew was only going to last another 1000 miles, as a car that will last much longer. He as the seller has an advantage against the consumer. This knowledge of asymmetric information, as the consumer does not have as good information about the cars as the seller does, can also lead the consumer to assume that the cars are in general of poor quality. This will again give the seller an incentive not to sell high quality cars as the consumer will have no way of knowing that the car is of higher quality, and thus not be willing to pay a higher price for the car. Sellers can attempt to differentiate themselves from other providers by various guarantees, offers and independent assessments. Social interactions of people and their consequences are the subject of sociology studies. ...

Advertising serves two roles. Firstly, it allows producers to increase the amount of available information by providing consumers with more information about their products. Furthermore, it allows producers to use a lack of perfect information to counter product deficiencies by way of advertisement. In theory, the more information that exists about products, the more "free" a market is. In practice, it is also the quality of the information that counts. Generally speaking, advertising is the promotion of goods, services, companies and ideas, usually by an identified sponsor. ... Consumers are individuals or households that consume goods and services generated within the economy. ...

See also

• Complete information
• Extensive form game