An Insurance Company Is Likely to Attract Customers Like Clancy

question 96

Multiple Choice

An insurance company is likely to attract customers like Clancy, who wants to purchase insurance because he knows better than 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

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Definitions:

Data Set

A collection of data, often in tabular form, where each column represents a particular variable and each row corresponds to a given member of the data set.

Confidentiality

In the context of research, it refers to the obligation to protect personal information from unauthorized access, disclosure, or misuse.

Fidelity

The degree to which a copy or representation of something is faithful to the original.

Beneficence

The ethical principle that involves acting in the best interests of others, promoting good and preventing harm.