Asymmetric Information
From Open Risk Manual
Definition
Asymmetric Information is an Information imbalance in a transaction in which one Counterparty possesses more or better information than another party or parties, such as knowledge of hidden issues, costs or risky behavior.
Examples
- Borrowers have better information about their economic circumstances versus lenders
- Buyers of insurance products typically have better information about their level of risk exposure than do the sellers of insurance.
