Which of the following would be considered an example of adverse selection?

A) Malpractice insurance may increase the amount of malpractice.
B) Drivers may be less cautious because they have airbags installed in a car.
C) Those individuals who most need insurance are the ones most likely to buy it.
D) Work contracts that give a set number of sick-days may encourage more workers to call in sick.

Adverse Selection

A situation in which sellers have information that buyers do not (or vice versa) leading to transactions that favor the party with more information.

Malpractice Insurance

Insurance that provides coverage to physicians and other medical professionals for liability arising from disputed services that result in a patient's injury or death.

Airbags

Safety devices in vehicles designed to inflate rapidly in the event of a collision to prevent occupants from striking interior objects or being ejected.