If you are unclear about the difference between asymmetric information and imperfect information, read the

following Clear It Up feature.

CLEAR IT UP

What is the difference between imperfect and asymmetric information?
For a market to reach equilibrium sellers and buyers must have full information about the product’s price and

quality. If there is limited information, then buyers and sellers may not be able to transact or will possibly make poor

decisions.

Imperfect information refers to the situation where buyers and/or sellers do not have all of the necessary

information to make an informed decision about the product's price or quality. The term imperfect information

simply means that the buyers and/or sellers do not have all the information necessary to make an informed

decision. Asymmetric information is the condition where one party, either the buyer or the seller, has more
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