A generalized information theory is proposed as a natural extension of Shannon's information theory. It proposes that information comes from forecasts. The more precise and the more unexpected a forecast is, the more information it conveys. If subjective forecast always conforms with objective facts then the generalized information measure will be equivalent to Shannon's information measure. The generalized communication model is consistent with K. R. Popper's model of knowledge evolution. The mathematical foundations of the new information theory, the generalized communication (...) model , information measures for semantic information and sensory information, and the coding meanings of generalized entropy and generalized mutual information are introduced. Assessments and optimizations of pattern recognition, predictions, and detection with the generalized information criterion are discussed. For economization of communication, a revised version of rate-distortion theory: rate-of-keeping-precision theory, which is a theory for datum compression and also a theory for matching an objective channels with the subjective understanding of information receivers, is proposed. Applications include stock market forecasting and video image presentation. (shrink)