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What is Adverse Selection in Insurance? Suggest two general ways of ameliorating Adverse Selection in Insurance.

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Economics

What is Adverse Selection in Insurance? Suggest two general waysof ameliorating Adverse Selection in Insurance.

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Adverse selection refers generally to a situation in which sellers have information that buyers do not have or vice versa about some aspect of product qualityin other words it is a case where asymmetric information is exploited Asymmetric information also called information failure happens when one party to a transaction has greater material knowledge than the other party Typically the more knowledgeable party is the seller Symmetric information is when both parties have equal knowledge In the case of insurance adverse selection is the tendency of those in dangerous jobs or highrisk lifestyles to    See Answer
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