# [[Information Asymmetry]] One side of a transaction knows more than the other. That's where value gets destroyed or captured. George Akerlof's "Market for Lemons" (1970) laid it out: when buyers can't distinguish quality from junk, the entire market degrades. Sellers of quality goods exit because they can't get fair prices. Only lemons remain. Every major financial infrastructure company exists to close an information gap. Bloomberg gave bond traders transparency. Moody's gave lenders credit visibility. The pattern repeats: wherever capital flows into opaque markets, someone builds the intelligence layer that makes pricing rational. Three forms that matter: - **Adverse selection**: The party with more info picks the deals that benefit them. Insurance markets, lending, used cars. The uninformed side gets the worst of it. - **Moral hazard**: Once a deal is done, one side changes behavior because the other can't observe them. Post-investment monitoring exists because of this. - **Signaling**: The informed party spends resources to credibly communicate quality. Degrees, certifications, audited financials, third-party risk assessments. The fix is always the same: create transparent, trusted, continuously updated information that both sides can rely on. Whoever builds that layer captures the spread between opacity and clarity. See: [[Azraq MOC]] (closing the info gap in digital infrastructure capital allocation), [[First Principles and Mental Models MoC]] --- Tags: #firstprinciple #systems #kp