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:
“[Religious establishment] is adverse to the diffusion of the light of Christianity ... [because] with an ignoble and unchristian timidity it would [be] circumscribed, with a wall of defence, against the encroachments of error.”
—James Madison (1751–1836)
“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)