Definition of Adverse Selection

Definition: In a market where buyers cannot accurately gauge the quality of the product that they are buying, it is likely that the marketplace will contain generally poor quality products. Adverse selection was first noted by Nobel Laureate George Akerlof in 1970.

Terms related to Adverse Selection:

• Screening
• Transition Economics
• Austrian Economics

About.Com Resources on Adverse Selection:

• Adverse Selection and the Insurance Market

Writing a Term Paper? Here are a few starting points for research on Adverse Selection:

Journal Articles on Adverse Selection:

• Adverse Selection in the Labour Market
• Pareto Optima and Competitive Equilibria with Adverse Selection and Moral Hazard
• The Pricing of Initial Public Offerings: Tests of Adverse-Selection and Signaling Theories