An example of adverse selection is

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Adverse selection refers to a situation where one party has better information than the other party in a transaction, resulting in an imbalance of information. In this case, purchasing more dental insurance when one knows their teeth are especially bad is an example of adverse selection because the individual has better information about their dental health than the insurance company, and is thus more likely to purchase insurance, which leads to an imbalance in information.

An Example of Adverse Selection Is