13) Consequently, adverse selection
will persist as a threat to public schools unable to deliver satisfactory education services.
Assuming constant plan generosity, the downward slope of the AC curve indicates the presence of adverse selection
(an upward slope indicates advantageous selection); however, the slope alone is not enough to identify the welfare cost.
Thus, the differences in the mortality of the population and the mortality of the insured annuitants caused by adverse selection
imply basis risk in longevity hedges.
Where adverse selection
does potentially occur, and to a serious degree, is in markets where regulation prevents insurers from taking into account risk information they surely could have.
There are no simple answers to the adverse selection
problem, other than insisting that everyone purchase the insurance.
Consistent with our hypotheses, IPOs with a high number of co-managers in their syndicates have lower spreads, lower adverse selection
costs, and a lower probability of informed trading (PIN) in the aftermarket.
is a risk that must be minimized through pricing and thorough new loan origination analysis.
In addition, employment groups pool health risks in a way that mitigates adverse selection
In regard to health care, Kotlikoff claims that market failure from adverse selection
in health insurance is so severe that adopting a universal health care insurance system is the only solution.
at Bloomington) has updated all his chapters and added new interactive exercises and a web site to cover game theory, including the concepts of dominated and dominant strategies, iterated dominance, and Nash equilibrium, information (such as sets, the Harsanyi transformation and Bayesian games) mixed and continuous strategies, dynamic games with symmetric information, reputation and repeated games with symmetric information, and dynamic games with incomplete information, and asymmetric information such as moral hazards, adverse selection
, mechanical design, postcontractual hidden knowledge and signaling.
This kind of overextension could likely result in adverse selection
and instability that could ultimately have dramatic effects on California's economy.
Wimmer and Chezum (2003) model adverse selection
as a case of Heckman's (1979) sample selection bias and examine the correlation between errors in participation and price equations to study how third party certification could alleviate the effect of adverse selection
in thoroughbred auctions.
The premier issue includes articles on: possible adverse selection
due to greater Medicare HMO enrollment; a game theoretical model of drug launch in India; the trade in human organs; cross-national comparisons of human resources for health; and, setting health care priorities.
also occurs when plans can observe characteristics that affect risk but cannot adjust premiums to reflect these risks.
However, I do worry about the dependence of Emanuel and Fuch's plan has on risk adjusting to offset the costs of adverse selection