asymmetric information

A situation in which one party in a transaction has more or better information than the other — creating potential for exploitation, market failure, and inefficiency.

• asymmetry/eɪˈsɪmɪtri/(n)

• asymmetric information problem
• information asymmetry
• reduce asymmetric information
• asymmetric information in markets

1. 1.Used car markets suffer from asymmetric information: the seller knows the car's history (accidents, maintenance); the buyer doesn't. This is Akerlof's "market for lemons" — bad cars drive out good ones because buyers can't distinguish them. (buyer disadvantage)
2. 2.Health insurance faces asymmetric information in reverse: the insured person knows their health better than the insurer, leading to adverse selection — sicker people are more likely to buy coverage. (seller disadvantage)

• information imbalance (unequal access to relevant facts)
• knowledge gap (difference in understanding between parties)

"asymmetric" from Greek "a-" (not) + "symmetria" (proportion) — information that is not proportionally distributed