Auto Insurance Providers Charge Higher Premiums to Young Male Drivers

question 111

Multiple Choice

Auto insurance providers charge higher premiums to young male drivers, because they tend to be involved in more car accidents than other populations. This is an example of:

• A)adverse selection.
• B)signaling.
• C)moral hazard.
• D)statistical discrimination.

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Definitions:

Degrees of Freedom

The number of independent values or quantities which can be assigned to a statistical distribution, affecting the shape of the distribution.

P-values

P-values provide the probability of obtaining an effect at least as extreme as the one in your sample data, assuming the truth of the null hypothesis.

Standard Error

A statistic that measures the average distance that a sample statistic, such as the mean, deviates from the actual population mean.

Alternative Hypothesis

A statement that contradicts the null hypothesis and is tested directly in a hypothesis testing framework, assuming the null hypothesis is false.