Information asymmetry poses several risks for organizations, including:
Adverse Selection: When leaders make decisions based on incomplete or inaccurate information, they risk selecting suboptimal strategies or employees. Moral Hazard: Employees or managers may take undue risks if they feel they have more information than their superiors, potentially leading to unethical behavior. Loss of Trust: If employees feel that leaders are withholding information, it can erode trust and lead to disengagement and decreased productivity.