The concept of information asymmetry refers to unequal information between counterparties, where one side of the transaction has more information than the other, disrupting market efficiency. In the context of financial markets, the Modigliani-Miller Theorem underlined the concept as a key assumption of no information asymmetry in perfectly efficient markets.Further, extending George Akerlof's 1970 research on unequal information leading to market failures, Michael Spence introduced signalling theory, and Joseph Stiglitz analysed policy implications. They were jointly awarded the Nobel Prize in Economic Sciences in 2001 for this pioneering work.
.png)
