An Implication of Asymmetric Information in the Insurance Market Is

question 97

Multiple Choice

An implication of asymmetric information in the insurance market is that:

• A)people in average health may be discouraged from purchasing health insurance
• B)the price of health insurance may reflect the costs of a healthier-than-average person
• C)people with greater hidden health problems have an incentive to signal their current state of health to health insurance companies
• D)insurance companies have perfect knowledge about the health problems of those who purchase insurance

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Definitions:

Variable-Ratio

A reinforcement schedule in which a response is reinforced after an unpredictable number of responses, leading to high and steady response rates.

Latent Learning

Learning that occurs without reinforcement but is not demonstrated until there is an incentive to perform.

Shaping

A method of training by which successive approximations toward a target behavior are reinforced, used especially in behavior therapy.

Law Of Effect

A principle in psychology that suggests behaviors are more likely to recur if followed by positive outcomes and less likely if followed by negative outcomes.