WHAT IS INFORMATION ASYMMETRY

Like other activities, information collection requires the utilization of limited resources.
Consequently, according to the cost-benefit principle, a rational consumer will continue to
obtain information so long as its marginal benefit exceeds its marginal cost.

Asymmetry of information happens When the levels of information held by the two parties to a
transaction differ, information is present. Simply put, the first party has more information than
the other party, or vice versa. This may stop the other side from being watched or having their
decisions monitored. It causes a power imbalance and a faulty transactional outcome.

In looking for further information, one must accept certain costs in return for unknown
benefits, so it carries an element of risk.

-Expected value: the normal win or loss if a bet were made an unlimited number of times. It is
the result of multiplying all potential outcomes by their probabilities.

-Fair gamble: a wager with a negative anticipated value

-Risk averse person: someone who would take any reasonable or better chance.

Reference

https://www.investopedia.com/terms/a/asymmetricinformation.asp.
https://www.economist.com/the-economist-explains/2016/09/04/what-is-
information-asymmetry.
https://accounting.binus.ac.id/2021/10/01/the-importance-of-information-
asymmetry/.