Information Asymmetry
One side knows more than the other about quality, cost or intent, and prices the gap; unaddressed, it drives good products out of markets and turns negotiations into extraction.
An everyday example
A used-car market where buyers cannot tell lemons from good cars and so pay a lemon price for everything.
What it can cost you
Deciding on information the other side curated; being the informed party and losing the market's trust anyway.
Warning signs
- I am relying on their description of their own product.
- The important number is one only they can see.
One thing to do
Close the gap before deciding: independent inspection, warranties, references, disclosure; if it cannot be closed, price the uncertainty or walk.
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