The government could reduce adverse selection due to buyer-held private information by
A)requiring that insurance companies publicize their profit rates.
B)regulating the premium that insurance companies charge.
C)reducing the level of risk aversion in the population.
D)requiring everyone to buy insurance.

Question

Quizplus · Accepted Answer

Requiring everyone to buy insurance is a form of mandated insurance, which reduces adverse selection by forcing individuals with both high and low risks to purchase insurance. This, in turn, increases the pool of insured individuals and, consequently, decreases the average risk of the insured population.

The Government Could Reduce Adverse Selection Due to Buyer-Held Private