Adverse selection can be defined as a phenomenon in the market, that arises due to asymmetric information between buyers and sellers, which leads to a loss for either of the two. Buzzle explains more about this concept with some examples.
Investopedia does a nice job of explaining the difference between adverse selection and moral hazard, two important theories we cover in the class. Investopedia takes a look at it from a business standpoint which gives another unique perspective.
Loss Coverage : Why Insurance Works Better With Some Adverse Selection (Hardcover) (Guy Thomas)
Insurers face adverse selection, with enrollment in exchange plans tilted too heavily toward consumers with higher than average health expenses. As a result, insurers on the exchanges suffer persistent, large, and growing financial losses, and large-scale withdrawals from the exchanges by major insurers are expected.