A generalized information theory is proposed as a natural extension of Shan
non's information theory. It proposes that information comes from forecasts
. The more precise and the more unexpected a forecast is, the more informat
ion it conveys. If subjective forecast always conforms with objective facts
then the generalized information measure will be equivalent to Shannon's i
nformation measure. The generalized communication model is consistent with
Popper's model of knowledge evolution. The mathematical foundations of the
new information theory, the generalized communication model, information me
asures for semantic information and sensory information, and the coding mea
nings of generalized entropy and generalized mutual information are introdu
ced. Assessments and optimizations of pattern recognition, predictions, and
detection with the generalized information criterion are discussed. For ec
onomization of communication, a revised version of rate-distortion theory:
rate-of-keeping-precision theory, which is a theory for datum compression a
nd also a theory for matching an objective channels with the subjective und
erstanding of information receivers, is proposed. Applications include stoc
k market forecasting and video image presentation.