How could adverse selection cause risk averse?

Yesterday I argued that because of the common existence of adverse selection in almost all markets, people's risk preferences are generally risk averse. I feel I did not explain the question of how adverse selection causes risk averse clearly, so I am going to explain it in detail again today.

Adverse selection is likely to keep the market prices lower as people generally underestimate the goods and services’ values and prices due to imperfect information. However, as customers do not feel that they as demanders involve in the price making processes, they commonly think that the price makers are those suppliers and they do not trust the prices set by the suppliers. Individuals are very likely to believe the prices are set higher than their actual values (or prices), so they will dislike the current market prices. Once they dislike the prices, they will feel they are losing if they make the purchases. Then their expected returns from the purchases could be lowered due to their subjective opinions. This leads to once the prices are equal to their expected utility, sometimes people will still not make the purchase decisions.

In addition, distrusting market information and prices makes people think there is more potential risk existing. Therefore, even with the understanding of the current market risk, people will still believe there is greater risk. They will appear to be risk averse when they think they have more risk than there appears to be. With the same returns in all states but greater risk, people’s expected returns are definitely lower than those with lower risk. Therefore, given the market risk, people think the actual risk is greater than the market appears to have, their expected returns are lower than if they believe they only have the risk that the market appears to have.

To conclude, people are risk averse because they believe they are bearing greater risk than the markets appear to have due to the possible existence of imperfect information.