2 Adverse selection(逆向选择) The situation is called adverse selection. For example,because they cannot distinguish between high-risk and low-risk individuals,if insurance companies must charge a single premium,more high-risk individuals will insure, making it unprofitable to sell insurance. How to alleviate adverse selection problem?2 Adverse selection（逆向选择） ◼ The situation is called adverse selection. For example, because they cannot distinguish between high-risk and low-risk individuals, if insurance companies must charge a single premium, more high-risk individuals will insure, making it unprofitable to sell insurance. ◼ How to alleviate adverse selection problem?