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Aren't Wi-Fi adapters transmitting unencrypted information to an access point/router?

Last Modified: 2015-03-25
My apologies for such a naive question, but strangely I haven't come across this when reading on the Internet: from my PC to my router, isn't the signal unencrypted--I don't see any Wi-Fi encryption controls in Windows or in the Wi-Fi adapter documentation--so my next door neighbor conceivably could receive it? I understand the basics of wireless security once my PC is connected to a router. I am aware of the risk of using my PC on a public network like at a Starbucks. But the descriptions of the risk all seem to be about packet sniffing and access point spoofing on the network--no one seems to say anything about someone sitting next to me and setting his Wi-Fi adapter to my adapter's channel to receive my laptop's unencrypted transmissions to the access point. My and his Wi-Fi adapters are just fancy digital radios that I would think could communicate with each other. I know there is an infrastructure mode and a point to point mode, but he and I would be using infrastructure mode. Obviously I am missing something basic here. Thank you.
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