CHAPTER 1 z The Micro- and Macroeconomics of Information zy Sandra Braman University of Wisconsin-Milwaukee Introduction zyxwvu Economic products and processes have always involved information, but technological innovation has changed society in such a way that information is now at the center of economic thinking and practice. At the microeconomic level, several strands of work dealing with problems that range from decision making under uncertainty to the nature of risk are now collectively referred to as the “economics of information,” with the phrase “the information economy” often used to refer to informa- tional issues at the macroeconomic level. The two interact: As con- sciousness of the evolution of the information economy has grown, the amount of pertinent microeconomic work has increased; and as new ways of thinking about microeconomic informational issues appear, they in turn inspire new macroeconomic questions. Both micro- and macro- economic thought deal with the same problem-how to understand information creation, processing, flows, and use from an economic per- spective. Accordingly, this chapter uses the phrase “the economics of information” as an umbrella term to refer to issues raised by informa- tion at every level zyxwvu of analysis. The question of how to define information itself has also been prob- lematic. As Porat (1977) noted, there is not even a single definition that embraces all aspects of the information industries as a primary sector. Babe (2004) has suggested that it may be this very definitional difficulty that has led to so much confusion for economists working in this area. Information changes over time, depending on context and relationships with other information, just as it has multiple identities at any given point in time, depending upon the perspective of the entity accessing andlor using it. When information is understood as a commodity, it is a commodity that is heterogeneous (Allen, 1990; Porat, 1977). Alternatively, however, as Lamberton (1998a) has suggested, a taxon- omy of definitions of information can be used for purposes of economic analysis. The approach used in this chapter does just that by defining