Question
The problem where one party to a transaction has more or
better information than the other, leading to potential market failure, is called:Solution
Asymmetric Information is the broader, overarching problem where one party (e.g., a seller, borrower, or agent) possesses material knowledge that the other party (buyer, lender, principal) does not. Adverse Selection (pre-contract) and Moral Hazard (post-contract) are specific manifestations of this problem.
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