information asymmetry

**Information Asymmetry** refers to a situation in which one party in a transaction or interaction has more or better information than the other. This imbalance can lead to inefficient outcomes, such as market failures, mistrust, or suboptimal decisions. In economic and business contexts, information asymmetry often occurs between buyers and sellers, employers and employees, or lenders and borrowers. Understanding information asymmetry is crucial for designing better contracts, improving transparency, and fostering fairer exchanges.