Adverse Selection
- Social Sciences -
Economics & Business Dictionary
Definition
An economics and business concept defining a measure, method, or organizational practice used for analysis and decision-making. It specifies how information is generated or used to guide allocation of resources and evaluation of outcomes. It does not ensure correctness without clear assumptions, reliable inputs, and appropriate review of results.
Adverse Selection
Social Sciences Dictionary
Definition
A market failure that occurs when asymmetric information about private qualities or risks, present before a transaction, causes one side to participate with a higher probability of unfavourable characteristics, altering prices, allocations or market participation in ways that can reduce mutually beneficial trade.