Manhattan Reborn 1978

new York.

It's approaching evening~

Manhattan, top floor of the Blue Crystal Hotel.

As soon as David walked to the elevator door, he saw Professor John Nash, who was holding a cardboard box in his hands and smiled at David.

"In the afternoon, I went to the Flint Library at Princeton University to borrow some books for Carnes."

David took the box from Professor Nash and invited him into a room next to Giles' room, smiling at Carnes who was studying hard.

"Hey, look who's here!"

"Uh... Professor!"

"What are you doing..." Carnes asked in confusion when he saw the box of books David placed in front of him.

Professor Nash and David looked at each other, smiled, sat down next to each other, picked out a few books from the box and explained.

"The way of thinking that David talked about, combining game theory with economics, was actually proposed by someone more than a decade ago~"

"Look at this book, it's the book "The Production and Distribution of Knowledge in the United States" published in 1962 by Professor Fritz Machlup of Princeton University."

"The book first proposed the theory of knowledge industry, which includes five aspects: education, scientific research and development, communications, information facilities and information activities. It also made statistical measurements based on the proportion of knowledge industry in the U.S. national economy in 1958."

"According to his estimate, in 1958, 30% of the U.S. gross national product (GNP) came from the information industry, and more than 32% of the total labor input came from information production and activities."

"This book was translated into Russian in 1966 and into Japanese in 1968. It has been included in the recommended book lists of almost all famous universities around the world."

“There’s also this book, which was written by Daniel Bell, a sociologist at Harvard University in 1973, in his book The Coming of Postindustrial Society, which further expanded the concept of the information economy.”

"Professor Bell believes that developed countries have evolved from pre-industrial society to industrial society and finally to the post-industrial society stage."

“In the new social stage, the basic strategic resources, tools, working environment and cultural concepts of economic activities have undergone a series of changes.”

Professor Nash placed another book in front of Carnes and smiled with an exclamatory tone.

"Dr. Mac Uri Porat of Stanford University updated the statistics of the US knowledge industry based on Machlup's research~"

"He also referred to Professor Bell's works and completed the internal report of his research work "The Information Economy" in nine volumes last year, and proposed two main lines of research in the field of information economics~"

“Macro- and micro-information economics.”

“Macro information economics is also known as information economics and information industry economics.”

"It focuses on the study of information industry and information economy. It is an emerging discipline that studies the value production, circulation, utilization and economic benefits of information, a special commodity. It is developed and established on the basis of the continuous development of information technology and is also an important research field of economics."

“Micro information economics is also known as theoretical information economics.”

“It starts from a micro perspective, studies the cost and price of information, and proposes to use the theory of incomplete information to correct the assumptions of complete and certain information in the traditional market model.”

“It will focus on examining, collecting and using information to improve the mechanisms of market economic efficiency.”

“Because it mainly studies how parties formulate contracts and agreements under asymmetric information conditions, and how to regulate the behavior of the parties, it is also called contract theory or mechanism design theory.”

Professor Nash said this, looking at David who was sitting next to him, with a gleam in his eyes, and smiled.

“But in essence, I think the future direction of microeconomics will be to apply asymmetric information game theory to economics.”

“Game theory studies the issues of the decisions made by the decision-makers and the equilibrium that can be achieved when the behaviors of the decision-makers interact with each other.”

"The problem that information economics studies is the existence of asymmetric information when the behaviors of decision-makers influence each other."

“In this context, asymmetric information refers to information that some participants possess but others do not.”

"please wait!"

Feeling very overwhelmed, Carnes quickly stopped Professor Nash's narration, turned to a new page in the notebook in his hand, quickly made a note, and then he breathed a sigh of relief.

Professor Nash saw that he had finished the record in a hurry and continued with a smile.

“So the information discussed in information economics refers to information that affects the interests of both parties, rather than all possible information.”

"Asymmetric information can be divided into two categories according to its content~"

"The first type is the asymmetry of knowledge between the two parties, which means that one party does not know the other party's information such as ability and physical health status. This is exogenous and predetermined, and is not caused by the behavior of the two parties."

"For this kind of information asymmetry, information economics calls it hidden knowledge and hidden information."

“The second type of asymmetric information refers to the situation where the information possessed by both parties is symmetrical when the contract is signed, but after the contract is signed, one party cannot manage or constrain the behavior of the other party. This is endogenous and depends on the behavior of the other party.”

"For this kind of information asymmetry, information economics calls it hidden action."

"For example, after signing a contract, the employer cannot freely control whether the employee works hard or slacks off. To solve this problem, an incentive mechanism must be implemented to make the employee take the right actions."

“For example, what kind of salary system or welfare system should be used to make employees work hard.”

“In our daily life and work, we encounter the problem of asymmetric information in two situations.”

“Depending on the time when asymmetric information occurs, information asymmetry that occurs ex ante will cause adverse selection problems, while information asymmetry that occurs ex post will cause moral hazard problems.”

After Professor Nash finished this paragraph, he suddenly stopped and looked at David, his eyes filled with hope, encouragement and curiosity.

David understood Professor Nash's thoughts, crossed his legs, smiled, nodded, and continued.

“Therefore, adverse selection and moral hazard are two basic research topics in information economics.”

"Under asymmetric information, adverse selection and moral hazard may occur at any time. Western information economics believes that the way to reduce them is to establish incentive mechanisms and signal transmission mechanisms."

“Traditional economics believes that prices condense all market information and are free to obtain, so they can be freely used by all market participants, who then have complete information about market operations.”

“The interactions between decision-making individuals are included in prices through the market, and direct economic connections are not equivalent to interactions.”

“Thus, direct interactions or economic linkages do not form part of traditional economic analysis.”

"This implies that traditional economic analysis does not include private information, that is, there is no information asymmetry."

"Information economics believes that prices are obtained in the search process at the expense of costs → resulting in incomplete information!"

“These determine that competition is imperfect, there is direct interaction and influence between decision-making individuals, and private information plays an important role → leading to information asymmetry.”

“Under conditions of incomplete and asymmetric information, perfect rationality turns into limited rationality, that is, economic individuals are selfish and act according to the principle of maximization, but they usually do not have the information needed to make the best decision.”

“The capabilities of economic individuals are limited, and their rationality is also limited.”

“The results of individual rational choices may be irrational, and individual rationality does not necessarily lead to collective rationality. The direct interaction and influence between individual decision-makers becomes the starting point for our specific analysis.”

"But~"

“Although an asymmetric information environment is one of the important established conditions of micro-information economics, its perfect competition model is difficult to exist in reality.”

“Because asymmetric information means that both parties to a transaction will hide some private information related to the transaction that others do not know.”

"Without this information as a given, it is difficult for us to complete the assumptions of complete and certain information in the analytical model."

"Therefore, whether it is macro information economics or micro information economics, it requires very comprehensive and accurate intelligence information as support, so that we can build a complete analytical model and then analyze the opponent's ideas, intentions and decisions."

David smiled as he spread out his palms towards Kanes who was frowning and lost in thought.

"For example, if the government wants to comprehensively combat corruption, it needs to secretly collect relevant information through various means. After obtaining solid evidence, it can refer to the prisoner's dilemma theory in game theory to attack corrupt officials and their accomplices one by one."

"In this way, even if the corrupt officials have reached a conspiracy before being arrested, they will eventually succumb to the huge pressure and selectively confess some problems when they don't know what their companions will choose."

"Because whether it is the rational person hypothesis in traditional economics or the specific cases that have happened in real life, they all show~"

“Most people will make self-serving, selfish choices that maximize their own interests.”

"A few people will choose to remain silent, watching the opportunity to fight for their own interests slip away, and then they will regret it."

"As for the very few who are completely outside the scope of the majority, they may take all the crimes or responsibilities on their own initiative for some reason, thinking that this will maximize their own interests."

David saw Carnes raise his head and look at him with a somewhat empty look. He slowly stopped smiling, stood up, walked to his side and sat on the carpet, looking at him from a close distance and spoke.

“I’ve been to David Rockefeller Sr.’s office in Rockefeller Center.”

"There is a business card storage room in his office, which contains more than 150,000 pieces of personal information."

"These 150,000 pieces of information are the number he arranged for someone to screen after decades of continuous screening."

"Carnes, do you think we will be like old David in this life... treating work and career as everything in life?"

"You might, but I never will!" Kanes answered almost without thinking.

"Haha~" David put his hand on his shoulder, glanced at Professor Nash who was full of surprise, and laughed.

“Since you don’t want to become a workaholic, you should try your best to learn more, watch more, listen more, think more, and experience more when you are young, and then use game theory knowledge as much as possible to find your own Nash equilibrium point.”

"Haha..." Carnes turned back and looked at Professor Nash, and they both couldn't help laughing.

Amid the laughter of the two, David took out a book from the box and handed it to Carnes: "This is the Republic, a work by the Greek philosopher Plato. It is one of the most borrowed books in many university libraries."

"Plato was a student of Socrates."

“The metaphor of the cave that he presents in this Republic has echoes of it at the beginning and the end of the book.”

"The Allegory of the Cave still has a profound influence on political and educational theory today."

"If you can understand it, and study Hume's Three Treatises of Human Nature and Walter Lippmann's Public Opinion carefully, you can almost build a plan for your own life."

"Um... okay." Carnes picked up "The Republic", took a look at it, and nodded slowly.

Professor Nash saw the two men stop talking, looked down at the few remaining books in the box, and tried to ask David.

“What do you think of Mark Y. Porat’s “The Information Economy: Defining and Measuring”?”

“What did it show you?”

David leaned back on the edge of the sofa, arms outstretched, and smiled at Professor Nash.

"As far as I know, the book Borat was completed with full funding from the Department of Commerce."

"He clearly pointed out in his book that the information economy has both the same characteristics as other economies and a series of structural characteristics that are unique to it."

"In the near future, as the high-tech information revolution blows from the United States to the whole world, horizontal organizations such as small companies and small factories will replace vertical organizations such as large companies and large factories."

"The enterprise structure of the information economy is knowledge and technology intensive, the labor force structure is intellectual labor-intensive, the industrial structure is low-consumption and high-efficiency, the institutional structure is small-scale and decentralized, and the consumption structure will be diversified."

"Information economy, as a new economic form, is becoming an inevitable choice for improving economic quality and enhancing industrial competitiveness."

"It will expand, strengthen and change the way people produce, live, work, study and behave in an all-pervasive and significant way."

"So when the era of information revolution really arrives, it will be both a scientific and technological revolution and an industrial revolution. It will also be a shortcut for the United States to completely get rid of the post-industrial era."

David raised three fingers to Professor Nash and said, "The famous economist Professor Mundell once proposed a theory of impossible triangle."

"It means that the selection of economic, social and fiscal and financial policy objectives faces many difficulties and it is difficult to achieve the three objectives at the same time."

"And this theory, in terms of financial policy, means free capital flows, fixed exchange rates and monetary policy independence. It is impossible to have all three."

"If the US government wants to get out of the current inflation dilemma, it must actively maintain the free flow of capital and the independence of monetary policy, sacrifice exchange rate stability, and implement a floating exchange rate mechanism that is independently regulated by the market."

"According to the economic data provided to Mark Porat by the U.S. Department of Commerce~"

"In 1967, 46% of the U.S. economic output was related to information activities, which means that about half of the workforce was engaged in information-related occupations, and 53% of the income of employed people came from such occupations."

"Porat's research not only demonstrates the continuous growth of the U.S. information industry, but also further improves the concepts, methods and measurement systems of the information economy."

"This not only greatly promoted the rapid development of market statistics, but also proved to us that international profit-seeking capital will definitely keep an eye on this big pie and gradually increase investment in high-tech information companies, prompting them to enter a period of rapid development and ushering in the information revolution."

David put down his fingers, looked at Professor Carnes and Nash, and sighed.

"In the information economy, emerging industries such as chips, integrated circuits, computer hardware and software, optical fiber cables, satellite communications and mobile communications, data transmission, information networks and information services, new materials, new energy, bioengineering, environmental protection, aerospace and oceanography occupy an important position."

"The development of this information economy will not negate the existence of the agricultural economy, industrial economy, and service economy. On the contrary, it will promote the quality of the practitioners in these three economies and greatly improve them through the information revolution."

"Moreover, with the continuous development of the information revolution, the knowledge economy era with mental labor as the main body will become a new stage of modernization development after the agricultural economy and industrial economy."

“Knowledge Economy refers to all knowledge created by human society, especially the historical product of scientific and technological knowledge.”

“The knowledge economy and the information economy are closely related, but also have certain differences.”

"The key to the knowledge economy is innovation!"

“Only by sharing information and combining it with human cognitive abilities can new knowledge be generated efficiently.”

“So in ten, twenty, or thirty years, high-quality human resources will be the most important and valuable resource.”

When David said this, a familiar movie clip flashed through his mind.

In this classic clip, an old thief uses the attitude of a "wise man" to instill his "beautiful, stupid and ignorant" subordinates.

What is the most valuable thing in the 21st century?

Talent!

But when he encountered danger, the first thing he thought of was to use the people around him as bait to divert the attention of the police so that he could escape calmly.

Irony?

irony!