Matty and Rudy Are the Same Age, Live in the Same

question 37

Multiple Choice

Matty and Rudy are the same age, live in the same town, and hold similar jobs a similar distance from their respective homes. They are so similar, in fact, that they are both offered the same auto insurance options. However, Matty has never been a particularly good driver, so he buys high-coverage auto insurance. Rudy, on the other hand, takes pride in being an excellent driver and thus only carries the minimum amount of insurance required. This example illustrates the potential for:

• A)risk pooling.
• B)risk aversion.
• C)adverse selection.
• D)diversification.

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Definitions:

Emotional Instability

A characteristic of experiencing rapid and intense emotional changes or mood swings.

Dispositional Contempt

A habitual feeling of disdain or scorn towards others or their actions.

High Self-Monitoring

A personality trait that refers to an individual's ability to adjust their behavior to fit the current situation.

Speed Dates

Short, timed meetings arranged between individuals seeking romantic partners, allowing both parties to quickly gauge potential interest.