Information failure occurs when consumers and producers lack perfect information about prices, costs, and benefits. There are several causes of information failure, including long-term consequences being unknown, complexity, unbalanced knowledge between buyers and sellers, and lack of price information. Examples include risks of tanning salons, addiction to drugs, complex pension schemes, and uncertain quality of used goods. Asymmetric information can also distort markets when one party has more information than the other, as in insurance markets where adverse selection and moral hazard can occur. Governments can address information failures through policies like labeling, education campaigns, and consumer protection laws.