ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Asymmetric information exists in certain deals with a seller and a buyer whereby one party is able to take advantage of another. This is usually the case in the sale of an item. For example, if a homeowner wanted to sell their house, they would have more information about the house than the buyer.

Detailed explanation-2: -Adverse selection refers generally to a situation in which sellers have information that buyers do not have, or vice versa, about some aspect of product quality. In other words, it is a case where asymmetric information is exploited.

Detailed explanation-3: -The 2007–2008 subprime loan crisis was a classic example of the way asymmetric information can skew a market and cause market failure.

Detailed explanation-4: -Health insurance: An actuary in the insurance industry has more information about statistical risks than the people they are insuring. Financial markets: Financial professionals tend to have far more access to market information than retail investors. More items •02-Nov-2021