Adverse Selection
The classic paper on adverse selection is George Akerlof's "The Market for Lemons" from 1970, which brought informational issues at the forefront of economic theory. It discusses two primary solutions to this problem, signaling and screening.
Read more about this topic: Information Asymmetry
Famous quotes containing the words adverse and/or selection:
“The duty of the State toward the citizen is the duty of the servant to its master.... One of the duties of the State is that of caring for those of its citizens who find themselves the victims of such adverse circumstances as makes them unable to obtain even the necessities for mere existence without the aid of others.... To these unfortunate citizens aid must be extended by government—not as a matter of charity but as a matter of social duty.”
—Franklin D. Roosevelt (1882–1945)
“The books for young people say a great deal about the selection of Friends; it is because they really have nothing to say about Friends. They mean associates and confidants merely.”
—Henry David Thoreau (1817–1862)