from The American Heritage® Dictionary of the English Language, 5th Edition.
- noun 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 the inability of buyers to differentiate between high-quality and low-quality products or of sellers to differentiate between profitable and unprofitable customers.
from Wiktionary, Creative Commons Attribution/Share-Alike License.
- noun economics, business, insurance The process by which the price and quantity of goods or services in a given market is altered due to one party having information that the other party cannot have at reasonable cost.
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