Note: An example of adverse selection is the used-car market in which the seller knows more about the true condition of the car than the buyer, providing incentive to attempt to sell vehicles that are in worse condition than they appear, thus lowering the overall price buyers are willing to...
To illustrate adverse selection, let’s consider an example. Suppose there are two individuals, John and Sarah, who are both considering purchasing health insurance. John is currently in good health and has no pre-existing conditions, while Sarah has a chronic illness that requires regular medical...
adverse selection Also found in:Thesaurus,Medical,Financial,Encyclopedia,Wikipedia. n. The tendency of sellers to substitute low-quality products for high-quality products or of a uniformly priced service, such as insurance, to attract only the least profitable customers. Adverse selection arises from...
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Concealing such vital information leads to adverse selection. The insurance company will be at a disadvantage since it will enter into an agreement with a diabetic patient without knowing the health condition that the policyholder has. Adverse Selection between Buyer and Seller ...
Second, fix the adverse-selection problem this causes by mandating that everyone get themselves some health insurance. Who Needs a Public Option?|Matthew Yglesias|August 17, 2009|THE DAILY BEAST Word of the Day kinkeeping noun |kin-kee-ping ...
Adverse selection in health insurance: are first best contracts impossible ?David AlaryFranck_Bien
文档标签: Adverse Selection in Health Insurance 系统标签: adverse selection insurance health volume zeckhauser ThisPDFisaselectionfromanout-of-printvolumefromtheNational BureauofEconomicResearch VolumeTitle:FrontiersinHealthPolicyResearch,volume1 VolumeAuthor/Editor:AlanM.Garber,editor VolumePublisher:MIT Volum...
Individual choice over health insurance policies may result in risk-based sorting across plans. Such adverse selection induces three types of losses: efficiency losses from individuals being allocated to the wrong plans; risk sharing losses since premium variability is increased; and losses from insurers...
A prime example of adverse selection in regard to life or health insurance coverage is a smoker who successfully manages to obtain insurance coverage as a nonsmoker. Smoking is a key identified risk factor for life insurance or health insurance, so a smoker must pay higher premiums to obtain t...