The Problem of Adverse Selection

question 115

Multiple Choice

The problem of adverse selection

• A)implies that many people who do not need insurance coverage have it through group plans.
• B)means that those people who apply for insurance are the least likely to need insurance coverage.
• C)causes insurance underwriters to alter the health statistics of the general population when determining appropriate premiums.
• D)creates a savings element along with the insurance component of the premium and policy.
• E)does not exist in the insurance industry.

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Definitions:

Milgram's Study

A series of social psychology experiments conducted by Stanley Milgram, demonstrating individuals' obedience to authority figures.

Violent Pre-dispositions

The inherent tendencies or propensities in some individuals to behave violently or aggressively.

Offal Meat

Offal meat refers to the internal organs and entrails of a butchered animal, considered edible by humans.

Group Norm

Shared standards within a group that guide and constrain members' behaviors, reinforcing conformity and group cohesion.