Asymmetric information occurs when
A)everyone has the same information.
B)one person in a transaction has more information than the other.
C)people engaging in a transaction are uncertain about future events.
D)the information available to the people in a transaction is misleading or incomplete.

Question

Quizplus · Accepted Answer

Asymmetric information refers to situations where one party in a transaction has more information than the other, which can lead to unequal bargaining power and adverse selection or moral hazard problems. The other options do not capture the essence of the concept.

Asymmetric Information Occurs When