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Adverse selection

Definition of the noun Adverse selection

What does Adverse selection mean as a name of something?

noun

  1. [economics, business, insurance] The process by which the price and quantity of goods or services in a given market is altered due to one party having information that the other party cannot have at reasonable cost.

Explanation

Adverse selection, anti-selection, or negative selection is a term used in economics, insurance, risk management, and statistics. It refers to a market process in which undesired results occur when buyers and sellers have asymmetric information; the "bad" products or services are more likely to be selected. For example, a bank that sets one price for all of its checking account customers runs the risk of being adversely selected against by its low-balance, high-activity customers. Two ways to model adverse selection are to employ signaling games and screening games.

  • also known as 逆向选择

Printed dictionaries and other books with definitions for Adverse selection

Click on a title to look inside that book (if available):

Google previewWhat Is Health Insurance (Good) For? (2016)

An Examination of Who Gets It, Who Pays for It, and How to Improve It by Robert D. Lieberthal

Adverse selection refers to the tendency for those individuals who are more likely to make an insurance claim to seek insurance...

Google previewNavigating Health Insurance (2017)

by Alexis Pozen, Jim P. Stimpson

Adverse selection is a type of selection in which health plan sorting is caused by such incomplete or asymmetrical...

Google previewEncyclopedia of Health Services Research (2009)

Ed. by Ross M. Mullner by Ross M. Mullner

Adverse selection refers to the view that consumers pay the wrong price for health insurance.

adverse selection is that it—in addition to other factors— causes the price of insurance to be high, which may contribute to the numbers of the ...

Google previewYou Don't Always Get what You Pay for (2001)

The Economics of Privatization by Elliott D. Sclar

Adverse selection is a situation in which the party with inferior information about the market situation acts first in seeking to establish a contractual relationship (Salanie 1998).

Google previewEconomics (2011)

by Richard Lipsey, Alec Chrystal

Adverse selection is a problem that arises most commonly in insurance markets where, faced with the same rates, high-risk persons are more inclined to apply for insurance than low-risk persons. The relevance to labour ...

Google previewCommissioning for Health and Well-Being (2012)

An Introduction by Jon Glasby

Adverse selection is a risk in the latter two categories – assuming that the supplier is prepared to act opportunistically. Given that many public services fall into the experience, and even credence, categories, it is not surprising that opportunism ...

Google previewWomen, Health and Public Services in India (2016)

Why are states different? by Dipa Sinha

Adverse selection is a market failure due to asymmetric information between the buyer and the seller before a transaction takes place (Akerlof 1970).

Google previewInternational Encyclopedia of Social Policy (2013)

by Tony Fitzpatrick, Huck-ju Kwon, Nick Manning, James Midgley, Gillian Pascall

While adverse selection is an asymmetric information problem that occurs before the transaction occurs, moral hazard arises after the transaction occurs. The lender runs the risk that the borrower will engage in activities that are undesirable ...

Google previewWestern Review (1918)

The Fraternal Magazine

It is called adverse selection because the lapsing of healthy members increases the ratio of poor risks. Therefore, the surrender value usually iven a member withdrawing is less than t e full reserve. This assists in overcoming the effects of ...

Google previewFrequently Asked Questions in Islamic Finance (2010)

by Brian Kettell

Adverse selection refers to the possibility that potential borrowers who are the most likely to produce an undesirable outcome are the ones who ...

Google previewPrinciples & Practice Of Life Insurance

by Krishnaswamy

Adverse selection means the tendency of the proposer to profit from the insurance by giving wrong or incorrect or inaccurate information which cannot be verified by the insurer. The insurer should avoid such a risk. Such a risk is characterized ...

Google previewLending Booms, Real Estate Bubbles and the Asian Crisis (2002)

by Mr. A. Senhadji Semlali, Mr. Charles Collyns

Adverse selection is an asymmetric information problem arising when the riskiest investors are the ones who are most actively seeking loans. Thus, investors who are the most likely to produce an adverse outcome are most likely to be ...

Google previewThe Elgar Companion to Health Economics (2012)

by Andrew M. Jones

Favourable selection refers to the tendency for more healthy individuals to purchase more insurance, while adverse selection means that the less healthy purchase more insurance. Therefore, these attributes, which partly determine the ...

Google previewChoice (2011)

Challenges and Perspectives for the European Welfare States by Bent Greve

Adverse selection refers to the theoretical tendency for low-risk individuals to avoid or drop out of voluntary insurance pools, with the result that insurance pools can be expected to contain a disproportionate percentage of high-risk individuals ...

Google previewInvestment Risk Management (2014)

by H. Kent Baker, Greg Filbeck

Adverse selection refers to the perverse outcome that a tightening of conditions to avoid risk may paradoxically attract higher risks. A common example is that of insurance companies that might increase the price of insurance policies and as a ...

Google previewThe Dictionary of Health Economics, Third Edition (2014)

by Anthony J. Culyer

The explanation seems to lie in the significance for choice of other factors of importance to insurance buyers, which leads to 'advantageous selection' in contrast to adverse selection if people who are more risk averse also buy more insurance ...

Google previewInternational Dictionary of Public Management and Governance (2015)

by Gambhir Bhatta

Adverse selection: Also known as the hidden-information problem, this concept refers to the tendency of parties with information that affect other parties to make offers that are then detrimental (for example, someone with illness seeking health ...

Google previewThe Federal Reserve System: An Encyclopedia (2005)

An Encyclopedia by Rik W. Hafer

ADVERSE SELECTION. Suppose two individuals apply for a loan from a bank to buy a car. One of them intends to make payments on time, but the other does not. Before the bank makes the loans, it must determine if either of the two ...

Google previewEncyclopedia of Disability (2005)

by Gary L Albrecht

A companion issue with that of insurance risk in writing a policy is the issue of adverse selection. Adverse selection occurs if those who elect to participate in the program are sicker than average, and program costs may exceed expectations ...

Google previewDictionary of Financial Risk Management (1999)

by Gary L. Gastineau, Mark P. Kritzman

Adverse Selection: An unfavorable change in the composition of a group, usually in response to an economic incentive. For example, the withdrawal of healthy individuals from a group life or health insurance risk pool to buy cheaper individual ...

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Adverse selection Meaning

Video shows what adverse selection means. The process by which the price and quantity of goods or services in a given market is altered due to one party ...

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Anagrams of ADVERSE SELECTION

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  • OVERDELICATENESS

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