In the market for automobile insurance, adverse selection implies that
A) those who are insured might take greater risks.
B) those who are uninsured might take greater risks.
C) insured and uninsured alike will take greater risks.
D) drivers with greater risks are more likely to buy insurance.

Question

Quizplus · Accepted Answer

Adverse selection occurs when those with higher risks are more likely to purchase insurance because they anticipate needing it more than lower-risk individuals.

In the Market for Automobile Insurance, Adverse Selection Implies That