🔤 Adverse Selection ✨

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na muwafiq intikhab, nuqsandeh intikhab, karobari ya bima mein ghalat chunao

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📚noun

adverse selection

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DEFINITION

market situation where buyer or seller has superior information leading to bad choices

EXAMPLE SENTENCES

Insurance companies raise premiums to protect themselves against the financial risks of adverse selection. Adverse selection occurs when high risk individuals are more likely to purchase health insurance coverage. The bank introduced stricter screening processes to minimize adverse selection among loan applicants. Economists study adverse selection to understand why certain financial markets fail to operate efficiently. Providing clear product information helps businesses prevent adverse selection and build consumer trust.

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negative selection asymmetric selection market failure improper choice

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favorable selection balanced choice optimal selection