A key difficulty facing insurance companies is that people know more about their health than do insurance companies.What is this phenomenon called?

Question

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This phenomenon is called asymmetric information, which occurs when one party (in this case, the consumer) has more information than the other party (the insurance company) in a transaction. This can lead to issues such as adverse selection, where individuals with higher health risks are more likely to seek out and purchase insurance, causing premiums to rise for everyone. Moral hazard and economic irrationality are related concepts but do not refer specifically to this issue of information asymmetry.

A Key Difficulty Facing Insurance Companies Is That People Know