776 The Role of Information in Decision Making Edward Shinnick Univserity College Cork, Ireland Geraldine Ryan Univserity College Cork, Ireland Copyright © 2008, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. IntroductIon The advent of the World Wide Web and other commu- nication technologies has signifcantly changed how we access information, the amount of information avail- able to us, and the cost of collecting that information. Individuals and businesses alike collect and interpret information in their decision-making activities and use this information for personal or economic gain. Underlying this description is the assumption that the information we need exists, is freely available, and easy to interpret. Yet in many instances this may not be the case at all. In some situations, information may be hidden, costly to assimilate, or diffcult to interpret to ones own circumstances. In addition, two individuals who look at the same information can reach different conclusions as to its value. One person may see it as just a collection of numbers, another sees a market opportunity. In the latter case, information is used in an entrepreneurial way to create a business opportunity. Advances in technology have created opportunities to do this by creating information systems that can support busi- ness decision-making activities. Such decision support systems are playing an increasingly important role in determining not only the effciency of businesses but also as business opportunities themselves through the design and implementation of such systems for other markets and businesses. However all is not easy as it may frst seem. Qual- ity decision making and effective decision support systems require high quality information. The implicit assumption in talking about decision support systems is that the required information is always available. It is somewhere “out there” and must just be collated to make use of it. However, very often this is not the case. Information that is scarce or inaccessible is often more valuable and can be the very reason for many frm’s existence. The importance for frms to process information to do with its business environment on issues such as, market trends, events, competitors, and technological innovations relevant to their success is prevalent in the management and IS literature. 1 The theme of this article is to analyse the role information plays in managerial decision making at individual, group, and frm level from an economics perspective. We argue that access to information is essential for effective decision making and look at problems associated with insuffcient information; the effects that such information defcits have in shaping and designing markets are then explored. We start by exploring the nature of information and the issue of asymmetric information. We examine the different solutions put forward to address information defcits, such as advertising, licensing, and regulation. Finally we conclude by outlining likely future research in markets with information defcits. Background A crucial characteristic of a market place is the distribu- tion of information between supplier and client. There are two types of information involved in such cases. The frst is costly information, where, for example, a consumer must invest time and effort to search for the lowest price of a particular product or service. The second is asymmetric information, where the consumer may not be in a position to judge quality or make com- parisons between different suppliers because in most circumstances the consumer is not as well informed as the provider of the service. Consumers may also be open to opportunistic behaviour by suppliers because most people purchase some services infrequently (for example, professional services, housing, and cars). Over the last 35 years, the theory of markets with asymmetric information has been seen as an impor- tant feld of economic research. The theory has been