According to the theory of propitious selection:
A)risk-neutral people are more likely to opt for insurance coverage.
B)risk-averse people are more likely to opt for insurance coverage.
C)high-risk people submit large claims for insurance coverage.
D)high-risk people submit smaller claims for insurance coverage.

Question

Quizplus · Accepted Answer

The theory of propitious selection suggests that risk-averse individuals are more likely to opt for insurance coverage as they perceive a higher risk associated with not having coverage. Risk-neutral individuals, on the other hand, may be less inclined to purchase insurance as they do not perceive a significant risk in not having coverage.

According to the Theory of Propitious Selection