In the Market for Automobile Insurance,adverse Selection Implies That

question 14

Multiple Choice

In the market for automobile insurance,adverse selection implies that

• A) drivers with greater risks want to buy a policy without deductibles.
• B) drivers with greater risks want to buy a policy with large deductibles.
• C) uninsured drivers will drive recklessly.
• D) insured drivers will drive recklessly.
• E) moral hazard does not exist in this market.

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Definitions:

Res Ipsa Loquitur

A legal doctrine that allows for the assumption of negligence on the part of a defendant when an accident is of a type that typically does not occur without negligence.

Doctrine Application

A legal principle that is applied to a case or situation to resolve it.

Actual Cause

The direct, factual reason something happened in legal causation, often referred to as 'cause in fact.'

Proximate Cause

A legal concept that establishes the actual cause of an event or damage, linking the defendant's actions to the consequences directly.