Asked by vaughn peens on May 10, 2024
Verified
How does adverse selection affect the insurance market?
Adverse Selection
A situation where sellers have information that buyers do not, or vice versa, often resulting in a market failure.
- Understand the impact of moral hazard and adverse selection on the operations of insurance markets.
Verified Answer
LN
Lyndsy NoellMay 17, 2024
Final Answer :
High risk persons are more likely to apply for insurance than low risk persons.
Learning Objectives
- Understand the impact of moral hazard and adverse selection on the operations of insurance markets.
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