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.
References in periodicals archive ?
Minardi, Sanvicente, and Monteiro (2006) showed the absence of order processing and inventory holding costs and the presence of asymmetric information costs in the Brazilian stock market.
As I discuss later on, some models--which I shall call asymmetric information models of bubbles--can be understood as proper models of bubbles.
As a first step in getting a sense of the quantitative potential of loan guarantees to alter outcomes in such settings, we now study stationary equilibria of our model under asymmetric information.
The experiments described address such topics as asymmetric information and bank lending, strategic default with social interactions, divisible-good uniform price auctions, dividends,
Furthermore, the public interest analysis usually pays little attention to asymmetric information between regulator and regulatees.
The memo then lists some examples of market failure: "externality, market power, and inadequate or asymmetric information," with generalized examples of each of these and a couple more claimed market failures.
Arrow pointed the finger to two industries in particular: Financial and medical services, which have taken advantage of what is characterized as "asymmetric information" to enrich themselves at the expense of their customers.
Conditions of uncertainty, bounded rationality, asymmetric information, and information impactedness provide an ideal framework for strategic deception.
examine the interplay between asymmetric information and cost of capital while fully considering the forces of diversification.
Starting with the seminal study of Myers and Majluf (1984), there has been an ongoing stream of papers that suggest and provide evidence that asymmetric information can be exploited to market-time security issues.

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