Information asymmetry is the problem of:
A) an agent trying to exploit an information advantage in a dishonest way.
B) incentivizing an employee to work in the interest of the owner.
C) one party to an exchange having more information than the other party.
D) an offer conveying negative information about the product being offered.

Question

Quizplus · Accepted Answer

Information asymmetry occurs when one party in a transaction has more information than the other party, giving them an advantage in the transaction. This can lead to problematic outcomes such as market failure, where the market does not efficiently allocate resources due to the uneven availability of information. Options A, B, and D do not accurately describe the problem of information asymmetry.

Information Asymmetry Is the Problem Of