Search results
Results From The WOW.Com Content Network
Adverse selection models with private values can also be further categorized by distinguishing between models with one-sided private information and two-sided private information. The most prominent result in the latter case is the Myerson-Satterthwaite theorem . [ 27 ]
In life insurance, adverse selection describes the occurrence of individuals with a high-risk profession, hobby or health condition applying for life insurance more often than low-risk individuals ...
An example of adverse selection is when people who are high-risk are more likely to buy insurance because the insurance company cannot effectively discriminate against them, usually due to lack of information about the particular individual's risk but also sometimes by force of law or other constraints.
Economists distinguish moral hazard from adverse selection, another problem that arises in the insurance industry, which is caused by hidden information, rather than hidden actions. The same underlying problem of non-observable actions also affects other contexts besides the insurance industry.
In contract theory, the terms "screening models" and "adverse selection models" are often used interchangeably. [13] An agent has private information about his type (e.g., his costs or his valuation of a good) before the principal makes a contract offer. The principal will then offer a menu of contracts in order to separate the different types ...
Death spiral is a condition where the structure of insurance plans leads to premiums rapidly increasing as a result of changes in the covered population. It is the result of adverse selection in insurance policies in which lower risk policy holders choose to change policies or be uninsured.
Information asymmetry within the market relates to the seller having more information about the quality of the car as opposed to the buyer, creating adverse selection. [1] Adverse selection is a phenomenon where sellers are not willing to sell high quality goods at the lower prices buyers are willing to pay, with the result that buyers get ...
MIB aims to uncover errors, omissions, misrepresentations on insurance applications to reduce fraud and anti-selection or adverse selection. MIB Group, Inc. is a member-owned corporation operating in the United States and Canada since 1902. MIB's services are used exclusively by MIB's member life insurance companies to assess an individual's ...