Asymmetric information
What Asymmetric information means in Economics A-Level, as defined for AQA, Pearson Edexcel.
Definitions of Asymmetric information
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Reference: AQA
A situation where one party in an economic transaction possesses more or better information than the other, significantly distorting decision-making.
A situation where a market might reduce supply quality, as when paying for blood attracts donors who might conceal health risks to secure payment.
A gap between regulators and firms that can make it difficult to set appropriate price caps or environmental standards.
A situation where one party in a transaction has more or superior information compared to another, leading to adverse selection.
Topics that use Asymmetric information
- How markets and prices allocate resources (AQA A-Level)
- Imperfect information (AQA A-Level)
- Public ownership, privatisation, regulation and deregulation of markets (AQA A-Level)
- Government intervention (Pearson Edexcel A-Level)
Related terms
- Allocative efficiency
- Economic efficiency
- Economic incentives
- Economic performance
- Efficiency
- Equity versus efficiency
- Equity vs efficiency
- Ethics in economics
Using Asymmetric information in the exam
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