Imperfect Information: Market Failure and Asymmetric Information

The video explores the role of information in economics, focusing on perfect and imperfect information. It discusses how imperfect information can lead to market failures, using examples like misleading price signals and promotional materials. The concept of asymmetric information is introduced, with 'The Market for Lemons' illustrating its impact on the used car market. The video also covers moral hazard, where asymmetric information leads to suboptimal decisions, using examples from insurance and banking.

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