Which of the following is adverse selection?
A)the risk associated with selecting stocks in only a few specific companies
B)the risk that a person will become overconfident in his ability to select stocks
C)a high-risk person being more likely to apply for insurance
D)after obtaining insurance a person having less incentive to be careful

Question

Quizplus · Accepted Answer

Adverse selection refers to the concept that individuals with a higher level of risk are more likely to apply for insurance. In this case, a high-risk person is more likely to apply for insurance, which is an example of adverse selection.

Which of the Following Is Adverse Selection