Asymmetric information occurs when one party in a transaction has more or better information than the other party. This imbalance can lead to poor decision-making and market inefficiencies. For example, in the used car market, sellers often know more about the car's condition than buyers, which can result in buyers overpaying for a vehicle. This concept is important in various fields, including economics and finance. It can lead to problems like adverse selection, where only low-quality products are sold, or moral hazard, where one party takes risks because they do not bear the full consequences.