A life insurance company worries that people with low risk of dying will not buy insurance because the premium is too high relative to their risk. What problem does this refer to? adverse selection moral hazard free rider negative externality

A life insurance company worries that people with low risk of dying will not buy insurance because the premium is too high relative to their risk. What problem does this refer to? adverse selection moral hazard free rider negative externality

Business/Professional Ethics Directors/Executives/Acct

8th Edition

ISBN:9781337485913

Author:BROOKS

Publisher:BROOKS

Chapter3: Ethical Behaviour- Philosophers Contributions

Section: Chapter Questions

Problem 5.1EC

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Adverse Selection

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A life insurance company worries that people with low risk of dying will not buy insurance because
the premium is too high relative to their risk. What problem does this refer to?
adverse selection
moral hazard
O free rider
O negative externality

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