If a buyer or seller enters into an exchange with another party who has more information, there is
A) symmetric information and moral hazard.
B) asymmetric information and adverse selection.
C) a negative externality imposed.
D) a free-rider problem.

Question

Quizplus · Accepted Answer

Asymmetric information occurs when one party in a transaction has more or better information than the other, leading to adverse selection, where the party with less information is at a disadvantage in the transaction.

If a Buyer or Seller Enters into an Exchange with Another