Definition for "Information Asymmetry" in the Quantum Dictionary

- Social Sciences -

Economics & Business Dictionary

A microeconomic concept defining how agents make choices and how markets allocate resources under constraints. It specifies relationships among incentives, prices, quantities, and strategic behavior used to predict outcomes. It does not guarantee predictive accuracy without assumptions about preferences, technology, and information available to participants.

Social Sciences Dictionary

A situation in which one party to an economic transaction possesses material private information that the other party does not, and that information affects the parties’ payoffs or decisions; such asymmetries can generate market distortions like adverse selection and moral hazard unless mitigated.