« previous next »

Author Question: How can a buyer of car insurance help in reducing the effects of adverse selection? What will be ... (Read 86 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?

Approximately 70% of expectant mothers report experiencing some symptoms of morning sickness during the first trimester of pregnancy.

Did you know?

Disorders that may affect pharmacodynamics include genetic mutations, malnutrition, thyrotoxicosis, myasthenia gravis, Parkinson's disease, and certain forms of insulin-resistant diabetes mellitus.

Did you know?

Computer programs are available that crosscheck a new drug's possible trade name with all other trade names currently available. These programs detect dangerous similarities between names and alert the manufacturer of the drug.

Did you know?

Adult head lice are gray, about ? inch long, and often have a tiny dot on their backs. A female can lay between 50 and 150 eggs within the several weeks that she is alive. They feed on human blood.

Did you know?

After a vasectomy, it takes about 12 ejaculations to clear out sperm that were already beyond the blocked area.

Phenotypic effects in Drosophila larvae that have mutations in segmentation genes Phenotypic effects in Drosophila larvae that have mutations in segmentation genes
Anthropologist Andrea Wiley (left) investigates the effects of high-altitude living on reproductive Anthropologist Andrea Wiley (left) investigates the effects of high-altitude living on reproductive
Effects of Groundwater Pumping Effects of Groundwater Pumping
Common Serious Adverse Drug Reactions Common Serious Adverse Drug Reactions
The inverse-square law and its effects. Doubling your distance away from a radioactive material ... The inverse-square law and its effects. Doubling your distance away from a radioactive material ...
Effects of Friction on Wind Effects of Friction on Wind
Video: Neuron Type Animation

For a complete list of videos, visit our video library