Asked by
Incendium North
on Oct 26, 2024
Verified
In practice,insurance companies faced with adverse selection use _____ to deal with it.
A) moral hazard
B) deductibles
C) signals
D) co-pays
Adverse Selection
A situation in economics where one party in a transaction has more information than the other, often leading to inefficiencies and potentially flawed market outcomes.
Insurance Companies
Businesses that offer financial protection against various risks to individuals and entities.
Co-pays
A fixed amount paid by an insured patient for receiving certain medical services, with the insurance covering the remaining costs.
- Gain an understanding of adverse selection and its effects on market behaviors.
- Determine strategies to reduce the issues caused by adverse selection and moral hazard.
Verified Answer
SK
Learning Objectives
- Gain an understanding of adverse selection and its effects on market behaviors.
- Determine strategies to reduce the issues caused by adverse selection and moral hazard.