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Adverse selection

Definition of the noun Adverse selection

What does Adverse selection mean as a name of something?


  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.


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

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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 previewEconomic Approaches to Organizations (2008)

by S. W. Douma, Hein Schreuder

Adverse selection Hidden information Ex ante information problem The phenomenon described is called adverse selection in insurance economics. It refers to the expected outcome of the above scenario, which is that you will end up with a ...

Google previewEncyclopedia of Health Services Research (2009)

by Ross M. Mullner

Adverse selection refers to the view that consumers pay the wrong price for health insurance. From an economics perspective, the price that the...

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 previewGlobal Financial Crises and Reforms (2002)

Cases and Caveats by B. N. Ghosh

Adverse selection refers to the possibility of making incorrect selection/decision in the face of inadequate information. 16. In Mexico's case, as prerequisite for NAFTA. 17. Percent depreciation is computed ...

Google previewPublic Administration & Public Management (2006)

The Principal-Agent Perspective by Jan-Erik Lane, Professor of Political Science Jan-Erik Lane

The underlying game is called adverse selection. The relevance of the neo- liberal philosophy in relation to the public sector has been displayed most forcefully in its business sector, where the new governance regime of the public enterprise ...

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 previewThe Federal Reserve System: An Encyclopedia (2005)

An Encyclopedia by Rik W. Hafer

Adverse selection is a condition that occurs when there is asymmetric information . Adverse selection occurs when a lender cannot distinguish between a high-risk borrower and a low-risk borrower. When both types of borrowers actively seek a ...

Google previewU.S. Geological Survey Professional Paper (2003)

by Richard Lewis Bernknopf, David S. Brookshire, Philip T. Ganderton

Adverse selection Adverse selection is a phenomenon that occurs in insurance markets that is caused by an asymmetry of information between the consumer and the insurance ...

Google previewHandbook of Insurance (2013)

by Georges Dionne

Like moral hazard, adverse selection is an important problem beyond the domain of insurance.

Google previewHealth Care Regulation in America (2007)

Complexity, Confrontation, and Compromise by Robert I. Field

Adverse selection is a hazard lurking in most health insurance arrangements and is an ongoing source of policy tension. Those who are healthiest do not want to pay premiums that effectively subsidize those who are ill. However, without the ...

Google previewEncyclopedia of Public Health. 2 Vol. (2008)

by Wilhelm Kirch

Definition Adverse selection refers to a situation in which individuals are able to purchase health insurance at a premium that is below actuarially fair premiums. Adverse selectionoccurs because of ▷informationasymmetries:con- sumersare ...

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 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 ...

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 previewA Dictionary of Economics (2012)

by John Black, Nigar Hashimzade, Gareth Myles

adverse selection The ...

Google previewInternational Encyclopedia of Social Policy (2013)

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

Adverse selection is one major factor why insurance markets function inefficiently or fail completely. To avoid adverse selection, insurers may require purchasers of health insurance to have a medical examination or extend the waiting period.

Google previewThe Entrepreneur's Dictionary of Business and Financial Terms (2013)

by Khwaja Masoom

Adverse Selection: Self-selection, within a single risk category, of persons of aboveaverage risk. Adverse selection is a situation in which market participation is a negative signal. Advertising Elasticity ofDemand: The responsiveness demand ...

Google previewThe Princeton Encyclopedia of the World Economy. (Two volume set) (2010)

by Kenneth A. Reinert, Ramkishen S. Rajan, Amy Joycelyn Glass, Lewis S. Davis

Adverse selection occurs in a market if it is difficult to distinguish parties that are good risks from those that are bad risks, and the parties that represent bad risks are particularly attracted to the market. For example, consider a set of borrowers ...

Google previewEncyclopedia of Agriculture and Food Systems (2014)

Crop insurance has all the problems associated with any other form of privately offered insurance: ratings difficulties, adverse selection, and moral hazard. As crop insurance is also publically subsidized, it faces policies concerns, including the ...

Google previewDictionary of Health Insurance and Managed Care (2006)

by David E. Marcinko, MBA, CFP, CMP

ADVERSE SELECTION: The tendency of people who are less than standard health insurance risks to seek or continue insurance to a greater extent than other individuals. This so-called “selection against the insurer,” or “antiselection,” is a ...

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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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