Information Asymmetry Scenario Explorer
Explore who holds the informational advantage, when the gap matters, what economic mechanism may follow, and which responses fit the problem.
1. Choose a healthcare scenario
Start with a preset, then change the analytical choices to test how the interpretation changes.
2. Interpretation
Responses that fit this mechanism
3. Keep the mechanisms distinct
Information asymmetry is the underlying information imbalance. The other terms describe particular ways that imbalance may affect decisions.
| Mechanism | Key question | Typical timing | Healthcare example |
|---|---|---|---|
| Adverse selection | Is a hidden characteristic affecting who enters or which contract is chosen? | Before agreement | A person knows more than the insurer about expected healthcare needs. |
| Moral hazard | Does behaviour change when an action is difficult to observe or its consequences are shared? | After agreement | Use of care changes after insurance reduces the price paid at the point of use. |
| Principal–agent problem | Has one party delegated a decision to a better-informed agent with potentially different objectives? | During delegated decision | A patient relies on a clinician to recommend care whose necessity is difficult to judge. |
| Quality uncertainty | Can the buyer or decision maker assess quality or supporting evidence? | Before or after choice | A purchaser cannot fully verify provider quality or a manufacturer’s modelling assumptions. |
How to use the result
The classification is a structured interpretation of the choices entered, not proof that market failure has occurred. A real assessment must establish which information is consequential, how incentives change, whether behaviour or outcomes are affected, and whether an intervention would improve welfare after its costs and unintended effects are considered.
More disclosure is not automatically the answer. Information must be credible, relevant and usable, while monitoring, regulation or incentive changes must be proportionate to the problem.