Which relationship involves asymmetric information
A)An employee knows more than his employer knows about his work effort.
B)A lender knows more than the borrower about his ability to repay the loan.
C)The buyer of a 30-year-old house knows more than the seller about the condition of the house.
D)A consumer knows more about a product than the employee who assembled it.

Question

Quizplus · Accepted Answer

In asymmetric information, one party has more or better information than the other. In option A, the employee knows more about his work effort than the employer, creating an information imbalance.

Which Relationship Involves Asymmetric Information