BLOG SURF: Information gap
Governments around the world regulate everything from how firms carry out their business to the manner in which public agencies are expected to deliver services.
In doing so, however, there is reliance on the concept of information, both its stock and its flow.
Thus, understanding the notion of asymmetry is important to understand why governments do what they do, and hence why their performance varies.
What then is ‘information asymmetry’? Access to and capability to process information is varied across the board, leading to an imbalance.
Differences in existing information and access to it lead to limited and incomplete information across groups.
Indeed, inefficient institutions result from imperfect and costly information, so we need to tackle information asymmetry to improve governance. We can identify three specific components of imperfect information.
First, there is lack of information across time, or in other words, we know more at time.