Nodes of knowledge and know how exchange packages of information in complex economic information systems. This in context of Caesar Hidalgo’s “Why Information Grows”.

A potential pitfall in business is assuming that customers have sufficient knowledge and know how to make a purchase. Therefore a business needs to communicate redundant instructions about every detail of a transaction. Thus doing so will give the buyer confidence to pull the trigger on a purchase.

Confidence is a measure of consumer information vs consumer perception of how much information is needed to make the purchase. Thus approaching this need for communication from the lens of Information Theory  will enable a business or individual to apply context to all financial transactions.

A business is an information network in which each node (customer, management or employee) represents one byte of knowledge and know how. Therefore in Information Theory there is no fundamental difference between a company’s management, employees and customers. Each is simply a node within the network.  Therefore coaching and communication are just as important with consumers as employees.

A Taco Vendor and Information Theory

The following illustrates a business failing to convey the appropriate knowledge and know how to a consumer.

Bob decides while walking home from that he is going to purchase a taco from a local street vendor. As Bob walks he sees a street vendor. At first, Bob decides that he is going to buy a food from this street vendor. However at the last moment, as he approaches, Bob decides to pass on the taco vendor and head to Taco Bell. Why did Bob change his mind? Bob’s superior knowledge and know how of Taco Bell is to that of the street vendor. He calculated his choice based on his knowledge and know how.

Bob was concerned that street vendor had no pricing menu available and was on a limited budget.  Bob was afraid that if he approached the window and found that the prices were to high, he would be obligated to make a purchase or risk looking foolish by walking away. On the other hand Bob had a lifetime’s worth of Taco Bell knowledge and know how. He knew exactly how much it would be chose Taco Bell in the end rather than take a chance on something new.


A business needs to exploit every opportunity to show potential customers what is involved in a transaction. Redundancy communication through advertisement and marking will help . It will aid in ensuring the consumer knows how to make a transaction. Never assume that a customer will read between the lines.

The food-cart owner knew how to cook the food but Bob didn’t know all that was involved in buying a taco. If the street vendor had a sign that said $6 for a taco Bob would have been more confident in walking up and buying that taco. The street vendor assumed incorrectly on some level that Bob would have had enough information to buy their food. They failed to see me the potential consumer as an extension of their information network.