The fact that someone with information about a significant number of illnesses in their family history is likely to purchase health insurance is an example of
A)adverse selection.
B)monitoring.
C)moral hazard.
D)screening.

Question

Quizplus · Accepted Answer

Adverse selection occurs when one party in a transaction has more information than the other, particularly in insurance markets. In this case, the person with detailed knowledge of their family's health history is more likely to purchase health insurance because they are aware of the higher risk of illness, potentially leading to higher costs for insurance companies who cannot discriminate risk as accurately.

The Fact That Someone with Information About a Significant Number