An Insurance Company Is Likely to Attract Customers Like Clancy

question 323

Multiple Choice

An insurance company is likely to attract customers like Clancy who want to purchase insurance because he knows better that the company that he is more likely to make a claim on a policy. What is the term used to describe the situation above?

• A) moral hazard
• B) adverse selection
• C) asymmetric information
• D) economic irrationality