Business analytics is informed by theories from economics. Particularly important are models of incomplete information, for example, the models of moral hazard, where economic actors take hidden actions in their own self-interests, and adverse selection, where unobserved differences among economic actors known only privately to each result in their taking different actions.
Also important are models of equilibrium strategic behavior, such as those derived in the theory of noncooperative games of incomplete information, which allow the equilibrium features of models of moral hazard and adverse selection to be investigated. Perhaps the best known and most successful applications of equilibrium strategic behavior in the presence of adverse selection involve models of auctions. Auctions have garnered billions and billions of dollars for such firms as eBay and Google and have also been important in determining which firms have access to the radio spectra that make using cellphones and WiFi so convenient.
Methods of business analytics also rely heavily on tools from econometrics as well as those from mathematical economics.
