| 31. | This increases the risk of moral hazard and adverse selection problems for firms with a lower net worth.
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| 32. | He described adverse selection as " the annoying tendency people have to do what's best for themselves ."
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| 33. | The two most important classes of models in complete contracting theory are adverse selection and moral hazard models.
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| 34. | The main drawback of the system involves the potential for what the insurance industry calls " adverse selection ."
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| 35. | The reason is " adverse selection " _ a problem that afflicts many markets, but insurance markets in particular.
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| 36. | Many experts question whether Bush's subsidy is sufficiently generous to attract enough people to avoid crippling adverse selection problems.
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| 37. | Moreover, attempting to reduce one problem, say adverse selection by mandating insurance, may add to another, say moral hazard.
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| 38. | Adverse selection models can be further categorized in models with private values and models with interdependent or common values.
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| 39. | If the market has access to the company s information, there is no longer a state of adverse selection.
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| 40. | Hence, as the interest rate goes up, the return to the lender decreases only considering the adverse selection effect.
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