Asked by Emerson Bernheiser on Jun 14, 2024
Verified
Which of the following represent examples of adverse selection?
A) Unhealthy people are more likely to want health insurance.
B) Careless drivers purchasing extra auto insurance.
C) Risk averse individuals choosing to buy extra insurance.
D) all of the above
E) A and B only
Adverse Selection
A situation in insurance and markets where parties on one side of the transaction have more information than the other side, leading to a selection of risks that are more unfavorable.
Unhealthy People
Individuals who experience a lower state of health, often due to chronic diseases, lifestyle choices, or environmental factors.
Careless Drivers
Individuals who operate vehicles in a negligent manner without regard for the rules of the road or the safety of others.
- Gain insight into the phenomenon of adverse selection in health insurance and its consequences.
Verified Answer
Learning Objectives
- Gain insight into the phenomenon of adverse selection in health insurance and its consequences.
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