An implication of asymmetric information in the insurance market is that people in average health may be encouraged to purchase health insurance.

Question

Quizplus · Accepted Answer

Asymmetric information in the insurance market, particularly adverse selection, often leads to healthier people opting out of insurance because they perceive it as not worth the cost, while those with poorer health or higher risks are more likely to purchase insurance, knowing they are more likely to use it.

An Implication of Asymmetric Information in the Insurance Market Is