Most economic theories specify equilibrium relationships among economic variables, and, at least implicitly, the equilibrium information flows among economic decision-makers. However, the adjustment process which moves the system to an equilibrium position is usually not specified. This research proposes a method for analyzing a general class of such adjustment processes. The principal goal of this analysis is to determine the minimal communication and coordination among economic decision-makers needed to achieve equilibrium. This can be compared with the information flow generated by the economic institutions under study. If the latter is less than the former, equilibrium cannot generally be achieved, and the equilibrium relationships cannot reliably approximate actual economic behavior. This information analysis is proposed as a new source of discipline in the evaluation of economic models. When the convergence to equilibrium requires information which cannot easily be communicated in an ongoing fashion, two directions of research are suggested. First, the additional information might be inferred from the historical behavior of observable variables, and this information might then be used in the design of the adjustment process. Second, the equilibrium concept might be changed to embody more modest optimality criteria. The latter approach is proposed specifically for the theory of the firm when communication is limited to accounting information.
