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In [[economics]] (especially when discussing [[insurance]]s), '''adverse selection''' describes a problematic result of a market process with [[information asymmetry|information asymmetries]].

In [[economics]] (especially when discussing [[insurance]]s), '''adverse selection''' describes a problematic result of a market process with [[information asymmetry|information asymmetries]].

In this case, one possible way for the factoring company to escape the adverse selection is to create a policy for sellers that only want to sell some of their accounts receivables. For example, sellers may only be allowed to sell a certain percentage of their cases - going alphabetically down the list instead of picking specific cases.

In this case, one possible way for the factoring company to escape the adverse selection is to create a policy for sellers that only want to sell some of their accounts receivables. For example, sellers may only be allowed to sell a certain percentage of their cases - going alphabetically down the list instead of picking specific cases.

==External links==

==External links==

*[http://ingrimayne.com/econ/RiskExclusion/Risk.html Moral Hazard and Adverse Selection] by Robert Schenk

*[http://ingrimayne.com/econ/RiskExclusion/Risk.html Moral Hazard and Adverse Selection] by Robert Schenk

[[category:economics]]

[[Category:Economics]]