« previous next »

Author Question: How can a buyer of car insurance help in reducing the effects of adverse selection? What will be ... (Read 85 times)

D2AR0N

  • Hero Member
  • *****
  • Posts: 561
on: Jun 29, 2018
How can a buyer of car insurance help in reducing the effects of adverse selection?
 
  What will be an ideal response?

Question 2

A game is called a simultaneous move game if ________.
 
  A) players choose their actions at the same time
  B) one player chooses her action after the other player makes a move
  C) players choose mixed strategies to play the game
  D) players choose their dominant strategies to play the game


smrtceo

  • Sr. Member
  • ****
  • Posts: 344
Reply #1 on: Jun 29, 2018
Answer to Question 1

Adverse selection occurs in the insurance market due to asymmetric information. A buyer of car insurance knows about his/her ability to drive a car and hence the likelihood of having an accident, while the insurer does not. A buyer can reduce this information asymmetry by signaling the insurer about his/her abilities as a driver, for example, by passing driving competency tests.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

D2AR0N

  • Hero Member
  • *****
  • Posts: 561
Reply #2 on: Jun 29, 2018
Correct answers!


smrtceo

  • Sr. Member
  • ****
  • Posts: 344
Reply #3 on: Jun 29, 2018
Great! Please up vote :D


« previous next »
 

Did you know?

The use of salicylates dates back 2,500 years to Hippocrates's recommendation of willow bark (from which a salicylate is derived) as an aid to the pains of childbirth. However, overdosage of salicylates can harm body fluids, electrolytes, the CNS, the GI tract, the ears, the lungs, the blood, the liver, and the kidneys and cause coma or death.

Did you know?

Acetaminophen (Tylenol) in overdose can seriously damage the liver. It should never be taken by people who use alcohol heavily; it can result in severe liver damage and even a condition requiring a liver transplant.

Did you know?

Adults are resistant to the bacterium that causes Botulism. These bacteria thrive in honey – therefore, honey should never be given to infants since their immune systems are not yet resistant.

Did you know?

Critical care patients are twice as likely to receive the wrong medication. Of these errors, 20% are life-threatening, and 42% require additional life-sustaining treatments.

Did you know?

In Eastern Europe and Russia, interferon is administered intranasally in varied doses for the common cold and influenza. It is claimed that this treatment can lower the risk of infection by as much as 60–70%.

Disruptive selection. Disruptive selection.
Management of Opioid Adverse Effects Management of Opioid Adverse Effects
The effects of neonatal testosterone exposure on the size of the sexually dimorphic nuclei in male ... The effects of neonatal testosterone exposure on the size of the sexually dimorphic nuclei in male ...
Tricyclic antidepressants produce their effects by inhibiting the reuptake of neurotransmitters ... Tricyclic antidepressants produce their effects by inhibiting the reuptake of neurotransmitters ...
Melting ice and snow have far-reaching effects Melting ice and snow have far-reaching effects
The Effects of a Spinal Cord Injury by Spinal Level The Effects of a Spinal Cord Injury by Spinal Level
Video: Insulin (glucose uptake by body cells), glycogenesis and lipogenesis

For a complete list of videos, visit our video library