If one economic agent possesses more information that their fellow transactor________.

Question

Quizplus · Accepted Answer

Asymmetric information exists when one party has more information than the other party in a transaction. This creates a potential for one party to take advantage of the other or for the transaction to breakdown if the less informed party is not willing to participate. Therefore, if one economic agent possesses more information than their fellow transactor, asymmetric information exists.

If One Economic Agent Possesses More Information That Their Fellow