▁worst ▁case . ▁Ex amples ▁of ▁this ▁problem ▁are ▁ad verse ▁selection , ▁moral ▁ha z ard , ▁and ▁mon opol ies ▁of ▁knowledge . ▁ ▁Information ▁asym met ry ▁extends ▁to ▁non - e conom ic ▁behavior . ▁ ▁As ▁private ▁fir ms ▁have ▁better ▁information ▁than ▁regul ators ▁about ▁the ▁actions ▁that ▁they ▁would ▁take ▁in ▁the ▁absence ▁of ▁a ▁reg ulation , ▁the ▁effect iveness ▁of ▁a ▁reg ulation ▁may ▁be ▁und erm ined . ▁International ▁relations ▁theory ▁has ▁recognized ▁that ▁wars ▁may ▁be ▁caused ▁by ▁asym metric ▁information ▁and ▁that ▁" M ost ▁of ▁the ▁great ▁wars ▁of ▁the ▁modern ▁era ▁resulted ▁from ▁leaders ▁mis calcul ating ▁their ▁prospect s ▁for ▁victory ". ▁ ▁There ▁is ▁asym metric ▁information ▁between ▁national ▁leaders , ▁wrote ▁Jackson ▁and ▁Mor elli , ▁when ▁there ▁are ▁differences ▁" in ▁what ▁they ▁know ▁[ i . e . ▁believe ] ▁about ▁each ▁other ' s ▁arm aments , ▁quality ▁of ▁military ▁personnel ▁and ▁tact ics , ▁determ ination , ▁ge ography , ▁political ▁climate , ▁or ▁even ▁just ▁about ▁the ▁relative ▁probability ▁of ▁different ▁out comes " ▁or ▁where ▁they ▁have ▁" in complete ▁information ▁about ▁the ▁motiv ations ▁of ▁other ▁agents ". ▁ ▁Information ▁asym met ries ▁are ▁studied ▁in ▁the ▁context ▁of ▁principal – agent ▁problems ▁where ▁they ▁are ▁a ▁major ▁cause ▁of ▁mis in form ing ▁and ▁is ▁essential ▁in ▁every ▁communication ▁process . ▁ ▁Information ▁asym met ry ▁is ▁in ▁contrast ▁to ▁perfect ▁information , ▁which ▁is ▁a ▁key ▁assumption