meaning of Asymmetric information

Asymmetric information meaning in Economics Dictionary

When somebody knows significantly more than somebody else. These types of asymmetric information can make it burdensome for both individuals to conduct business collectively, which is the reason why economists, specially those practising game theory, want on it. Deals involving asymmetric (or exclusive) information are every where. A government attempting to sell broadcasting licences will not understand what buyers are ready to buy them; a lender will not know how most likely a borrower should repay; a used-car vendor understands more about the grade of the vehicle being sold than do potential buyers. This kind of asymmetry can distort individuals incentives and end up in significant inefficiencies.