High Quality Content by WIKIPEDIA articles! In economics and contract theory, information asymmetry deals with the study of decisions in transactions where one party has more or better information than the other. This creates an imbalance of power in transactions which can sometimes cause the transactions to go awry, a kind of market failure in the worst case. Examples of this problem are adverse selection,moral hazard, and information monopoly. Most commonly, information asymmetries are studied in the context of principal–agent problems.