Local knowledge problem
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In economics, the local knowledge problem is the argument that the information required for rational economic planning is distributed among individual actors and thus unavoidably exists outside the knowledge of a central authority. Economist Friedrich Hayek said that "practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation", while Leonid Hurwicz stated that there is no incentive for people to share this information truthfully with a central authority.
In economics, the local knowledge problem is the argument that the information required for rational economic planning is distributed among individual actors and thus unavoidably exists outside the knowledge of a central authority. Economist Friedrich Hayek said that "practically every individual has some advantage over all others because he possesses unique information of which beneficial use might be made, but of which use can be made only if the decisions depending on it are left to him or are made with his active cooperation", while Leonid Hurwicz stated that there is no incentive for people to share this information truthfully with a central authority.
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