Definition
- Asymmetric information
- Asymmetric information is a situation in which the two parties to an economic transaction have unequal information, so one knows much more than the other.
- Not to be confused with: Imperfect information
- Imperfect information is a situation in which buyers, sellers or both lack the information they need to make an informed decision about a product's price or quality.
Test yourself
What is the difference between asymmetric information and imperfect information?
Imperfect information means someone lacks information; asymmetric information means one side of the deal knows more than the other.