People with Hidden Health Problems Are More Likely to Buy

question 171

Short Answer

People with hidden health problems are more likely to buy health insurance than other people. As a result, people in average health may observe the high prices of insurance and decide not to buy it. This is an example of

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Definitions:

Arbitrage Opportunities

Situations in which it is possible to simultaneously buy and sell assets in different markets or in different forms to benefit from price differences without risk.

Nominal Risk-free Rate

The interest rate on a risk-free security that does not account for inflation.

Purchasing Power Parity

An economic theory that states that the exchange rate between two currencies is equal to the ratio of the currencies' respective purchasing power.

Relative Purchasing

The comparison of the purchasing power of various currencies against goods and services, adjusting for their price differences in different countries.