Lesson plan
Local knowledge problem
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.
Article summary
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.
Key claims
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Discussion questions
- Summarise the article in your own words. Which single claim would you verify first, and why?
- Which claim in this article is most likely to be revised as the sources update? How would you check its current status?
- If two sources disagreed about one of these facts, what would you need in order to trust one over the other?
Bibliography
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Key claims and bibliography are generated from the same tracked claims and sources as the article page.