Definition of Information asymmetry:
Situation that favors the more knowledgeable party in a transaction. In most markets (especially where the goods being traded are of uncertain quality, such as used equipment), a sellers is usually in a more advantageous position because his or her store of information is based on numerous sales conducted over the years. A buyers information, however, is based usually on an experience of only a few purchases. A similar situation exists between a commercial lender and a borrower.
How to use Information asymmetry in a sentence?
- You should try to match things up with information asymmetry so that you can figure out how best to proceed.
- When Jared went to the used car dealer, Marks Motors, he was concerned that the Ford truck he wanted was not as reliable as Mark said because Jared was a victim of the information asymmetry that favored Mark since he did not reveal the truck had previously been in a minor accident.
- Thousands of people get ripped off every year while purchasing a used car due to the information asymmetry between the seller and the buyer.
Meaning of Information asymmetry & Information asymmetry Definition