Model
Asymmetric Information
quote
Moral hazard and principal-agent problems can occur because of asymmetric information, where one side of a transaction has different information than the other side; that is, the available information is not symmetrically distributed. Real estate agents have more information about the real estate market than sellers, so it is hard to question their recommendations. Similarly, a financial adviser generally has more information about the financial markets than their clients.
From
Chapter:
Anything That Can Go Wrong, Will
Section:
Risky Business
