information asymmetry

Situation that favors the more knowledgeable party in a transaction. In most markets (especially where the goods being traded are of uncertain quality, such as used equipment), a seller's is usually in a more advantageous position because his or her store of information is based on numerous sales conducted over the years. A buyer's information, however, is based usually on an experience of only a few purchases. A similar situation exists between a commercial lender and a borrower.