So far, information has not really played much of a role in deriving all the basic ideas in finance that we have encountered so far (net present value, portfolio theory, capital structure, and option pricing). However, assumptions on information underlie many of these ideas. Specifically, most of the ideas that we have derived have been based on the assumption of symmetric information – everyone has the same information to value the asset. However, this is not a very realistic assumption. In the last two chapters in this book, we explicitly turn to the role information plays in setting prices for transactions. In this chapter, we are going to allow for the possibility that the buyer and seller of any asset have different information regarding the true value of an asset. In this case, who is better off?