The problem of adverse selection is usually more acute in case of automobile insurance compared to health insurance.

Question

Quizplus · Accepted Answer

Adverse selection is typically more acute in health insurance because individuals have better information about their own health risks than the insurer, leading to higher risks individuals being more likely to seek insurance, whereas in automobile insurance, the risk is more uniformly distributed and easier to assess based on factors like driving history and car type.

The Problem of Adverse Selection Is Usually More Acute in Case