6. Problems in insurance markets Consider the following story: When Joe didn't have renter's insurance, he was very careful not to leave candles lit in his apartment and locked the door when he left. Now that he has renter's insurance, he typically leaves candles burning all day and forgets to lock the door, because he knows that even if his apartment catches on fire or gets broken into, his insurance will cover it. The economic problem in this story is known as: Signaling O Screening Adverse selection O Moral hazard
6. Problems in insurance markets Consider the following story: When Joe didn't have renter's insurance, he was very careful not to leave candles lit in his apartment and locked the door when he left. Now that he has renter's insurance, he typically leaves candles burning all day and forgets to lock the door, because he knows that even if his apartment catches on fire or gets broken into, his insurance will cover it. The economic problem in this story is known as: Signaling O Screening Adverse selection O Moral hazard
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter1: Ten Principles Of Economics
Section: Chapter Questions
Problem 1PA
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