Economics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 8

In the early 1990s, New Jersey and Pennsylvania both reformed their automobile insurance systems so that citizens could opt for either a less-expensive policy that did not alpeople to sue if they got into accidents or a more-expensive policy that did alpeople to sue if they got into accidents. In New Jersey, the default option was the less-expensive policy that did not alsuing. In Pennsylvania, the default option was the more-expensive policy that did alsuing. Given those options, which policy do you think most people in New Jersey ended up with? What about in Pennsylvania? Explain.