Perfect information is a term used in economics and game theory to describe a state of complete knowledge about the actions of other players that is instantaneously updated as new information arises.
Chess and yahtzee are perfect information games while prisoner's dilemma, where players move simultaneously, is not.
In economics, a state of perfect information is required for a completely free market to function. That is, assuming all actors have perfect information, they will choose the best products, and the market will reward those who make the best products with higher sales. Perfect information would practically mean that all consumers know all things about all products, and therefore always make the best decision regarding purchase.
We know that perfect information does not exist (and can not totally exist). The results are evident in advertising, in which producers use a lack of perfect information to counter product deficiencies by way of advertisement. In theory, the more information that exists about products, the more "free" a market is.
See also