Question
What is adverse selection? Give an example of a market in which adverse selection might be a problem.
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Answered 1 month ago
Negative selection is a type of phenomenon that means choosing bad candidates at the expense of those who are better. Here, priority is given to hiring people whose qualities and expertise are below average. An example of such a selection is in the market of used cars and in the insurance market.
Answered 1 month ago
In a seller in a certain market knows significantly more than a buyer about a particular good that is being sold. The buyer could potentially be purchasing a good of low quality and not even realize it.
One example of those markets is the market for used cars.
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