Through the process of selecting menus for an upcoming reception, I have come to realize that I know essentially nothing about wine. I can taste a couple of glasses and tell you which one I like more, but anything beyond that, like knowing whether this merlot or that cabernet sauvignon would go better with which proposed entree, and you might just as well give me a coin to flip. The information is out there—there are books, wine-tasting clubs, and the like—but I don’t have it. What’s more, I am not going to get it, even though doing so would improve the selections I make and so enhance the pleasure of the guests at the reception.
The reason is that information about wine or any other subject is costly to acquire. Time, effort, and resources must be devoted in order to locate, gather, and assimilate information. In this respect, information is a good, and people need to decide how much of their resources they want to devote to acquiring it, just like they need to decide how much to spend on housing, cookies, swimming lessons, and everything else. Because information is costly, there is so much of it out there, and people have so many other desires beside acquiring information, they are not likely even to be able to approach full and perfect knowledge on any subject.
Importantly, though, even if a some people have the capacity to maintain such a mass of information, nobody should really want to know that much about a subject. Very few of us ever make decisions that require such detailed knowledge.
Individuals are not, of course, omniscient, even those who think themselves to be. The securing of information about the predicted effects of alternatives is a costly process, even in a world with reasonable certainty. Recognizing this, individual utility-maximizing behavior remains "rational" when choices are made on the basis of less-than-perfect information. There is some "optimal" investment in fact-finding and analysis for the deciding individual at each stage of his deliberation.