Essay Available:
Pages:
1 pages/≈275 words
Sources:
3
Style:
MLA
Subject:
Social Sciences
Type:
Essay
Language:
English (U.S.)
Document:
MS Word
Date:
Total cost:
$ 4.32
Topic:
Adverse Selection Information Problem in Insurance Companies
Essay Instructions:
The first draft is a brief summary of your research plan, identifying the information problem you are investigating and the sources you have found so far.
Write a short statement (roughly 250 words) outlining your plans for Essay 3 that identifies:
I. The problem
First, explain the real-world problem you are studying.
Second, explain how this is an information problem. Be specific.
· What does one party know that the other does not?
· What type of information problem is this?
o Moral hazard
o Adverse selection
II. The research
Explain what aspect of the problem you are researching. What is it you are trying to learn more about?
List the papers you are considering. What problems do they address? Why did you choose them?
Essay Sample Content Preview:
Name
Institution
Course Code and Title
Professor
Due Date
Adverse Selection Information Problem in Insurance Companies
An insurance information problem is an adverse selection problem in the real world that occurs when one party (insured) in a contract has relevant information that the other party (insurer) does not have. This issue is an information problem because there is asymmetric information, where the insured is more knowledgeable or gives incomplete or inaccurate details, making the insurance company make uninformed decisions that can cause adverse consequences.
The insured can know of significant risks involved in the insurance coverage, but the insurance company may be unaware of those actual risks. Therefore, the company would provide a higher insurance coverage since the insured risk is significantly higher than the risk the insurer knows (Maverick). Consequently, the insurer incurs adverse effects since its insurance coverage costs are higher than the premiums the insured pays and the actual risks exposure, causing an adverse selection information problem.
This research paper aims to study the mitigation aspect of the adverse selection insurance information problem or how insurance companies can protect against advers...
Institution
Course Code and Title
Professor
Due Date
Adverse Selection Information Problem in Insurance Companies
An insurance information problem is an adverse selection problem in the real world that occurs when one party (insured) in a contract has relevant information that the other party (insurer) does not have. This issue is an information problem because there is asymmetric information, where the insured is more knowledgeable or gives incomplete or inaccurate details, making the insurance company make uninformed decisions that can cause adverse consequences.
The insured can know of significant risks involved in the insurance coverage, but the insurance company may be unaware of those actual risks. Therefore, the company would provide a higher insurance coverage since the insured risk is significantly higher than the risk the insurer knows (Maverick). Consequently, the insurer incurs adverse effects since its insurance coverage costs are higher than the premiums the insured pays and the actual risks exposure, causing an adverse selection information problem.
This research paper aims to study the mitigation aspect of the adverse selection insurance information problem or how insurance companies can protect against advers...
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