Asymmetric information

Asymmetric information

Information that is known to some people but not to other people.

Asymmetric Information

A situation in which one party to a transaction has information about the transaction to which the other party is not privy. Asymmetric information may result in a bad deal for one party (often but not always the buyer). To give an extreme example, the seller of real estate may know that his property is lined with land mines. This would ordinarily result in a (steep) drop in price, but if the buyer does not know this, it may not. Asymmetric information is not as prevalent as it once was because of increased transparency and legal requirements for disclosure, as well as better technology. Indeed, trading securities with asymmetric information is often illegal. See also: Insider trading, moral hazard, adverse selection.
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The research was conducted to investigate whether a wealth transfer from presale property buyers to developers had been imposed in the pricing of presale properties due to the hidden presale risks arising from asymmetric information in forward property markets.
In the United States, previous financial literature has provided some empirical evidence regarding the factors affecting firmsa€™ dividend policies, which includes asymmetric information.
In each study, the authors apply six economic principles: opportunity costs; expected marginal costs and benefits; substitution; diminishing marginal returns; asymmetric information and hidden characteristics; and hidden actions and incentive alignments.
The theme that emerges in our analysis is that the process of renegotiating and modifying large numbers of mortgages is likely characterized by severe asymmetric information issues, which, when properly accounted for, dramatically increase the costs of modifications to levels that approach and may even surpass the cost of foreclosures described above.
Given that high-risk individuals purchase only partial insurance under a loss deduction policy, insurers have the difficulty of identifying the risk type of individuals under asymmetric information.
While the CRAs have been staffed with very competent personnel, it was also felt that there is room for improvement in the work systems, to address the problem of asymmetric information.
The second game examines government intervention to revive interbank lending through the lens of an asymmetric information problem.
Unfortunately, the problem of asymmetric information can never be eliminated entirely, and consumers may never have as much knowledge as they'd like when making purchases.
As economic theory goes, there are four sources of market failure: imperfect competition, public goods, externalities and asymmetric information.
In this section, we present our hypotheses as to how the aforementioned double-sided problem of asymmetric information and uncertainty influences payment methods and acquirer (relative) returns, building upon three different economic channels.
Contract theory is an effective method to design incentive compatible mechanisms in a monopoly market under asymmetric information [22].
In the language of economists, centrist politicians face a problem of asymmetric information.

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