Asymmetric information describes a situation in which one party to a transaction or negotiation has more information than the other party. In other words, the information is lopsided or “asymmetric.” Insurance applications typically involve asymmetric information because the applicant will most likely know more, for example, about their own health conditions or driving habits than the insurance company. Insurance companies use underwriting to offset the effects of asymmetric information. Adverse selection is a glossary term related to asymmetric information.