Information Problems in Competitive Markets and Their Impact on Labor Markets

1. Uncertainity

In economic science, there is a tendency towards the equilibrium situation in terms of the functioning of all markets. It is presumed that in a perfectly functioning market, especially at the markets where perfect competition conditions prevail, people have every kind of knowledge they need, as a result they are balancing their decisions or actions. A person's action can provide personal balance as a part of a specific plan. We can also assume that different actions of different individuals are balanced in a competitive system. This balance can be true for isolated individuals. However, it is impossible for the individuals to formulate their plans with different expectations and, more importantly, to discuss the balance in terms of all the individuals in the planning phase. For such a balance, the plans of all the individuals should be made in harmony with each other. However, an individual's plan will represent a data set for the other individual. Once this balance is achieved, it will continue until an external influence or new information emerges. (Hayek, 1937).

The only factor that affects the structure of markets is not equilibrium. The markets have a sophisticated complex structure. Because there are many variables affecting the functioning of markets (Hayek, 1974). These variables affect the distribution of the resources in the economy and ultimately affect the welfare level directly.