Compared to the case in which a monopoly insurer offers the consumer a contract,if insurance is competitively provided:
A)any moral hazard or adverse-selection problem is alleviated.
B)any moral hazard or adverse-selection problem is worsened.
C)the essence of any moral hazard or adverse-selection problem would not change much.
D)insurers would no longer offer menus of contracts.

Question

Quizplus · Accepted Answer

Competitive provision of insurance does not fundamentally alter the nature of moral hazard or adverse-selection problems. These issues stem from asymmetric information between insurers and insureds, which persists regardless of the market structure.

Compared to the Case in Which a Monopoly Insurer Offers