Small Discussion essay question

In One Page, describe the concept known as adverse selection? Explain how does its existence affect the market for health insurance? List and describe a few examples of insurance companies protect themselves from adverse selection?

APA

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Adverse selection is a concept used to describe a situation where there is an unfair advantage on one side of a deal. A single party in a negotiation or agreement has important information about the market that the other side does not know. A seller might be aware of crucial details that the buyer is unaware or vice versa which affects their relationship. It is known as asymmetry of information and in business, it is of a negative impact as it might influence wrong decisions where businesses take up riskier or less profitable deals.

(325 words)