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2. What happens in a market when one side has more information than the other? How...

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2. What happens in a market when one side has more informationthan the other? How might this affect financial markets? Which sideof a financial market is more likely to have better informationthan the other. How might this have affected the financial marketsin the 2007-08 crash? What can be done to solve this problem? Couldany of these solutions avoided the 2007-08 crash?

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In a market when one side has more information than the other then a situation of asymmetric information is created and this leads to exchange of goods or services at a price which is not the equilibrium price In case of financial markets if the buyer has more information with regards to a financial security then    See Answer
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2. What happens in a market when one side has more informationthan the other? How might this affect financial markets? Which sideof a financial market is more likely to have better informationthan the other. How might this have affected the financial marketsin the 2007-08 crash? What can be done to solve this problem? Couldany of these solutions avoided the 2007-08 crash?

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