asymetric information

Asymmetric information is given in the situation in which a buyer and a seller have different information on the same transaction, leading to a situation of price discrimination, harmful to consumers as it may be paying more for the same product than others . This asymmetric information leading to the market economy to a socially inefficient macroeconomic outcome.

The "adverse selection" is a term used in financial economics to describe the process by which a trader makes a wrong decision due to asymmetric information between buyer and seller.

Example: Imagine a situation where two players have exactly the same information (symmetric in this case), this being true and accurate. A company in the first quarter sheds 12% increase in profits and, as a reaction to this news, the title goes on the market. In the second quarter, the company returns to report 12% increase over its profits, but now the company is experiencing a run. What happened? Surely a 20% increase was expected instead of 12%. Opposite reactions to the same piece of information, uniform and symmetrical. Puzzling, is not it? We can still complicate matters.

The stock phenomenon can be aggravated to the extent that a clear and unequivocal piece of information, some people give an interpretation, while another group may give you another very uneven way.