Adverse Selection Occurs in Insurance Markets Because

question 39

Multiple Choice

Adverse selection occurs in insurance markets because:

• A)the seller has more information than the buyer.
• B)the buyer has more information than the seller.
• C)both the buyer and the seller have incomplete information.
• D)Any of these could be the cause of adverse selection in insurance market.

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Definitions:

Hybrid Compensation Policy

A compensation plan that combines elements of both fixed salaries and variable pay based on performance, aiming to motivate and retain employees.

Compensation Packages

The total combination of salary, bonuses, benefits, and any other form of financial reward provided to employees.

Market

The environment in which goods, services, and labor are exchanged, influencing prices, employment rates, and economic conditions.

Compensation Role

The function of compensation in an organization, focusing on how it attracts, motivates, and retains employees through monetary and non-monetary rewards.