Asked by Aketzalli Martinez on Sep 24, 2024

​Adverse selection happens because

A) ​One of the parties has more information about itself then the other party
B) Individuals that the principle want to least select are the ones more likely to apply
C) Parties most likely to accept an offer would be least qualified 
D) ​All of the above

Adverse Selection

A situation in insurance and finance where those with higher risks are more likely to seek insurance or loans, leading to an imbalanced pool that can raise costs for insurers or lenders.

  • Describe the impact of adverse selection on insurance market operations.