What does adverse selection mean in economics?

Adverse selection. It is a phenomenon in the economic phenomenon that distorts the allocation of market resources due to information asymmetry. If the information is completely equal, adopt a neutral 2+2 way of thinking.

If the value perception of the same thing is completely objective, then it is the same, and there is no motivation for exchange. Therefore, from the perspective of 2+2, the so-called reverse is just the opposite direction of the reverse exchange, due to the reality of information asymmetry, the choice of both sides is the so-called reverse, and is not limited to the party holding monetary commodities. Buying and selling are mutual, and only seeing the adverse selection of the coin holder and not the seller's adverse selection cannot but be said to be influenced by a narrow 1+1 way of thinking.

The contrarian argument is just a name given to this economic phenomenon by economists, and the possible starting point is to hope that people will think backwards.

Consider each other's feelings and thoughts, rather than understanding the world purely from your own.

The most classic example is the used car market. When a person with a good car and a person with a bad car are placed on the same market, it is impossible to identify. The car buyer will only pay the price of the bad car, so the person who sells the good car will not be profitable, so he will withdraw from the market.

For good goods, they are driven out of bad goods, so it is called adverse selection. This is my understanding.

Adverse selection is the opposite choice, such as when the ** is reduced, it stands to reason that the consumer's choice is to buy, but due to insufficient information, consumers dare not consume, and make the choice of "not buying", which is diametrically opposed to the choice that should occur under conventional circumstances is called adverse selection, and it is also reflected in all aspects other than buying and selling.

Zhang Er Mazi doesn't necessarily have pockmarks on his face, or it may be because"Accent"Misunderstand. Most of this economic stuff is a gringo invention that reversely selects the original text"adverse selection"among them"adverse"We translated it"Zhang Er Mazi"But in fact, people's pockmarks are not so arrogant and conspicuous, English adverse: not likely to produce a good result

One sentence is translated"Reverse", come and find out who is"Reverse"？I understood the meaning and called him Zhang Er Mazi together, why care about whether he really had pockmarks on his face. The literal translation of the original word is"Options that are unlikely to have good results", as a result of a concentrated slight change in taste.

"Adverse selection" should be defined as a phenomenon of distortion in the allocation of market resources caused by information asymmetry. The most classic case is the "second-hand car market", where bad cars squeeze good cars out of the market, and in the end there are only bad cars in the market. Let's take a look at the example of microeconomics.

A concept close to adverse selection is moral hazard.

Adverse selection refers to the phenomenon that inferior products drive out high-quality products due to the information asymmetry between the two parties to the transaction and the decline of the market, and then the average quality of the products traded in the market declines. In the adverse selection insurance market, because the policyholder has more information about itself than the insurance company, the insurance company determines the insurance rate based on the average risk of all policyholders, so the rate is high for low-risk policyholders.

Adverse selection: It is a phenomenon in economic phenomena that distorts the allocation of market resources due to information asymmetry.

If the information is completely equal, the neutral 2 plus 2 way of thinking is adopted, and the value perception of the same thing by both parties is completely objective, then it is the same, and there is no motivation for exchange.

Therefore, from the perspective of 2 plus 2, the so-called reverse is just the opposite direction of the reverse exchange, due to the reality of information asymmetry, the choice of the two sides is the so-called reverse, not limited to the party holding monetary commodities. Buying and selling are mutual, and only seeing the adverse selection of the coin holder buyer and not the adverse selection of the seller cannot but be said to be influenced by the narrow 1 plus 1 way of thinking.

The contrarian argument is just a name given to this economic phenomenon by economists, and the possible starting point is to hope that people can consider their feelings and thoughts about the delay with reverse thinking, rather than understanding the world purely from their own side.

<>1. The meaning of choice is to choose; Select.

2. Lack of interpretation: selection; Select.

3. Citation:** "Song of Xiang Dan Xiuli": "You have learned to make choices at the critical juncture of your brother's argument, and the cause of caring for the people is more important than caring for yourself." ”

4. Usage: as a predicate.

5. Example: This is your own choice, don't blame others for a bad life in the future.

Adverse selection also refers to the fact that if one party to the market transaction can use more information than the other party to benefit itself and the other party is damaged, it is difficult for the information disadvantage to make a smooth buying and selling decision, so it will be distorted with the banquet, and lose the role of balancing supply and demand and facilitating transactions, which will lead to a decrease in market efficiency.

Moral hazard usually refers to the behavior of one of the parties to a transaction after the signing of the transaction agreement, one of the parties to a transaction uses more information than one party to purposefully harm the interests of the other party and increase its own interests.

1. Adverse selection is another problem caused by information asymmetry. It means that if one side of the market can use more information than the other party to benefit and the other party to the detriment, the nuclear ship tends to enter into an agreement with the other party to trade. Adverse selection is another major problem faced by insurance companies, and it is closely related to moral hazard.

In the insurance market, people who want to insure a particular loss for a particular key are actually the ones most likely to suffer a loss.

2. Therefore, the insurance company's compensation probability will exceed the company's overall loss rate according to the law of big data, which is the adverse selection of the insurance company.