A Good Way to Deal with Adverse Selection Faced by an Insurance

question 57

Multiple Choice

A good way to deal with adverse selection faced by an insurance company would not be to:

• A)fully indemnify its policy holders.
• B)require applicants to take a physical examination.
• C)require policy holders to pay a deductible.
• D)insure groups of individuals (such as all employees of a particular firm).

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Definitions:

Simulation

The use of models to study the behavior and performance of real-world processes, systems, or events in a controlled environment.

Inventory Modelling

The mathematical modeling of inventory systems to optimize the inventory levels, ordering quantities, and safety stock to minimize costs and meet demand.

Douglas McGregor

An American social psychologist best known for his Theory X and Theory Y classification, describing differing perceptions of workforce motivation.

Behaviour Modification Techniques

Methods or strategies used to change or modify individual or group behaviors, often applied within organizational or therapeutic settings.