1.3.4 Information Gaps

• Information gaps exist when either the buyer or seller does not have access to the information needed for them to make a fully informed, rational decision.
• Symmetric information means that consumers and producers have perfect market information to make their decision, leading to an efficient allocation of resources.
• Asymmetric information leads to market failure and is where there is unequal knowledge between consumers and producers, leading to to the misallocation of resources and the risk of moral hazard.