informationasymmetri

Information asymmetry occurs when one participant in a transaction has more or better information than another. This imbalance can distort decisions and markets because the less-informed party cannot accurately assess value, risk, or quality. The concept is central to information economics, contract theory, and policy design. In some languages the term appears as informationasymmetri.

Two classic forms are adverse selection and moral hazard. Adverse selection arises before a contract, when the information gap causes higher-risk or lower-quality options to dominate the market. Moral hazard arises after a contract, when incentives or behavior change because one party bears less of the downside. Signaling by the informed party and screening by the less-informed party are common mechanisms to reduce these problems.

The literature shows that asymmetric information can lead to market failures and price distortions. George Akerlof’s Market for Lemons illustrated how quality uncertainty can depress prices. Michael Spence proposed signaling through education or credentials. Joseph Stiglitz and Andrew Weiss analyzed credit rationing and other frictions in financial markets.

Applications occur across insurance, used-car markets, finance, health care, and labor markets, where information gaps influence pricing, selection, and incentives. For example, buyers may rely on doctors’ recommendations or employers on applicants’ credentials, while insurers assess risk based on disclosed or inferred information.

Remedies include signaling (credentials, warranties), screening (tests, audits), reputation systems, contracts that align incentives, and regulatory transparency. Advances in data collection and analytics can reduce information gaps, but complete symmetry is rarely achievable; information asymmetry remains a fundamental feature of many real-world markets.