Dictionary

adverse selection en · NOUN

Meanings

1. (uncountable) 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.
   • The large number of "lemons" in the used-car market is the result of adverse selection.
   • It is adverse selection that leads US workers who anticipate high family medical expenditure to seek employers with superior health insurance coverage for their employees.

Relateds

moral hazard · lemon · self-selection