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Adverse Selection |
Also found in: Medical, Wikipedia | 0.06 sec. |
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Adverse selection Refers to a situation in which sellers have relevant information that buyers lack (or vice versa) about some aspect of product quality. Adverse Selection A sociological phenomenon in which those persons with the most dangerous lifestyles or careers are the most likely to buy life insurance policies. Adverse selection may also occur if those persons conceal or falsify relevant information when they apply for the insurance policy. This has the potential of economic hardship for life insurance companies because those most likely to receive a death benefit are the ones buying policies. This reduces profit potential. Life insurance companies attempt to counteract adverse selection by limiting coverage and/or raising premiums. Adverse selection is also called antiselection. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| ? Mentioned in | ? References in periodicals archive | |
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The premier
issue includes articles on: possible adverse selection due to greater
Medicare HMO enrollment; a game theoretical model of drug launch in
India; the trade in human organs; cross-national comparisons of human
resources for health; and, setting health care priorities. The employee, of course,
would like to be hired, and so has an incentive to appear more
diligent during the interview than he really is; this fact
complicates the employer's efforts to pick the sort of employee
who will want to work hard, a phenomenon referred to as the
adverse selection problem. ``We believe adverse selection is a significantly greater risk in
the current environment of intensifying price competition than it was
two-to-three years ago when Aetna put through higher rate increases to
restore profitability. |
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