Information Gaps

• Symmetric information occurs when all parties in a transaction have equal access to information about the product, service, or market.
• In a symmetric information scenario, buyers and sellers possess the same information, leading to transparent and well-informed decision-making resulting in efficient allocation of resources.
• Symmetric information helps ensure fair and efficient transactions.
• Asymmetric information exists when one party in a transaction has more or better information than the other party.
• An example of Asymmetric Information is when purchasing a used car, the seller may possess more information about the car's condition and history than the buyer.
• This information asymmetry can lead to concerns about hidden defects or undisclosed accident history.
• Market failure occurs when buyers and sellers make suboptimal decisions due to information gaps, resulting in misallocation of resources
• Understanding the distinction between symmetric and asymmetric information, as well as the potential consequences of imperfect market information, is crucial for analyzing market outcomes and the role of government intervention in ensuring fair and efficient resource allocation