1.3.4: Information Failure

• Information failure: When people have inaccurate information, leading to irrational decision making
• Information gap: When the buyer and seller have different levels of information
• Asymmetric information: When buyers and sellers have different amounts of information
• Principal agent problem: When goals of principals (shareholders) differ from agents (company managers)
• Policy to address information gaps: Add compulsory labelling and nutrition information on food
• Policy to address information gaps: Introduce laws on consumer protection
• Policy to address information gaps: Increase awareness through technology