Information Sets

An information set contains all the (important) things that are known at a specific point in time. Naturally, information sets change over time as events and actions occur.

Looking forward, no one can know what is going to happen in the future. One can only use the information that is available to him at the time, that is, ex ante or before-the-fact information, to make his best guess as to what they think the world will look like in a week or a month or a year. It is only after events and actions occur, that is, after we know what the ex post or after-the-fact information is, that we will know for sure what the world actually looks like at that time.

Yet, people are frequently forced to make decisions in the present to prepare for the future, while not knowing exactly what the future will look like. While people generally use the ex ante information available to them to make the best decisions they can under conditions of uncertainty, they often end up being negatively judged on the basis of ex post information used by others for what turns out to be the wrong decisions. This a well-known faux pas referred to as Monday morning quarterbacking.