Jun 19, 2017
The concept of information asymmetry seems fairly obvious from its name. However, as a mental model, it deserves deeper study to fully understand all of its nuances.
At its most basic, information asymmetry describes a situation where two parties have different quantities or qualities of information. When one person has either more or better information than another, they have a massive advantage.
This mental model shows up a lot in investing, but can be applied in many areas of life.
For example, I remember being intuitively aware of information asymmetry during my poker days, despite not knowing the concept by name.
Be sure to check out the in-depth article on ThoughtStack.co.