22. Frontiers of Microeconomics . ASYMMETRIC INFORMATION. A difference in access to relevant knowledge is called information asymmetry . Hidden Actions: Principals, Agents, and Moral Hazard. Moral Hazard
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The median voter theorem is a mathematical result that shows that if voters are choosing a point along a line and each voter wants the point closest to his most preferred point, then majority rule will pick the most preferred point of the median voter.
In many economic transactions, information is asymmetric. When there are hidden actions, principals may be concerned that agents suffer from the problem of moral hazard. When there are hidden characteristics, buyers may be concerned about the problems of adverse selection among sellers. Private markets sometimes deal with asymmetric information with signaling and screening.