An insurance company offering high-deductible and low-deductible plans is an example of:
A)screening.
B)signaling.
C)statistical discrimination.
D)building a reputation.

Question

Quizplus · Accepted Answer

The insurance company is using screening by offering two different plans with different deductibles. Customers who are willing to take on more risk and want to pay lower premiums can choose the high-deductible plan, while customers who want more coverage can choose the low-deductible plan with higher premiums. By offering these options, the insurance company can attract different types of customers with different risk preferences. This is an example of screening.

An Insurance Company Offering High-Deductible and Low-Deductible Plans Is an Example