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Social Science Clinic => Economics => Microeconomics => Topic started by: tnt_battle on Jul 21, 2019

Title: What are the main differences between adverse selection and moral hazard in the insurance market?
Post by: tnt_battle on Jul 21, 2019

What are the main differences between adverse selection and moral hazard in the insurance market?

Title: What are the main differences between adverse selection and moral hazard in the insurance market?
Post by: CourtneyCNorton on Jul 21, 2019

Adverse selection describes who is most likely to acquire insurance. It predicts that those who need insurance the most (because they face the most risks) will acquire insurance, driving up insurance rates for everyone, leading the lower-risk customers to drop out of the market. Moral hazard describes how people behave once they have insurance, predicting that people will increase their risk-taking after acquiring insurance.

Title: What are the main differences between adverse selection and moral hazard in the insurance market?
Post by: tnt_battle on Jul 21, 2019

Excellent

Title: What are the main differences between adverse selection and moral hazard in the insurance market?
Post by: CourtneyCNorton on Jul 21, 2019

Great! Please up vote :D