Asymmetric information arises when one party knows more than another. Understanding the implications of this will help you understand everything from why private health insurance is difficult to why socialising with new people is hard.

Asymmetric information occurs in a range of contexts:

• the buyer doesn't know if your car has a hidden fault
• the health insurer doesn't know if you have a hidden condition
• your car insurer doesn't know if you bother locking your car
• your boss doesn't know if you're working or scrolling Tiktok
• you don't know whether or not your new acquaintance is a weirdo

The first three are hidden facts. The second two are hidden choices. Economists study these situations because they can lead to markets unraveling and collapsing. There are also a range of ways to mitigate them including: warranties, references, qualifications, reviews, medical questionnaires, insurance excesses.

For a seminal paper on this issue, see: The Market for "Lemons": Quality Uncertainty and the Market Mechanism (1970)