Finance & Businessfreq · 1via Dusty Flow

Adverse Selection

/ədˈvɜːs sɪˈlɛkʃən/noun
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Adverse selection refers to a market situation where one party has more or better information than the other, often leading to inefficient outcomes or market failure. This concept is particularly prevalent in insurance and used goods markets, where sellers might exploit their informational advantage to offload poor-quality products. In modern contexts, it's a key concern in digital economies, like online platforms where hidden details can skew transactions.

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