Consider the market for insurance against car theft

Assignment Help Business Economics

Reference no: EM131009776

Consider the market for insurance against car theft. Some people are more likely than others to have their car stolen. Because insurance companies have less information about this risk than their customers do, the market for car theft insurance suffers from asymmetric information. The most efficient solution to this asymmetric information problem would be for insurance companies to:

A. Require all customers to disclose their place of residence

B. Increase the price of theft insurance for all customers

C. Insist that their customers install car alarms

D. Choose to insure only people who park in a guarded parking garage

Reference no: EM131009776

Questions Cloud

Effect of the gramm-leach-bliley act : What has been the likely effect of the Gramm-Leach-Bliley Act on financial? consolidation?

How does the emergence of interest-rate risk : How does the emergence of interest-rate risk help explain financial? innovation?

Example of how purely competitive firms operate : The New York Stock Exchange (NYSE) is cited as an example of how purely competitive firms operate. The Glass-Steagall Act is one example of how purely competitive firms may be regulated. What affect do you conclude strengthening of regulatory instrum..

About the dental insurance : While James was in college, he did not have dental insurance. James went to see a dentist once a year. After James graduated and started working, he bought dental insurance for himself. This insurance is a zero co-pay, no-deductible policy, so James ..

Consider the market for insurance against car theft : Consider the market for insurance against car theft. Some people are more likely than others to have their car stolen. Because insurance companies have less information about this risk than their customers do, the market for car theft insurance suffe..

Using the alarm system : The Cole family owns a house with an alarm system that they activate whenever they leave the house. Recently, the Cole family purchased homeowner's insurance that fully covers all losses. After purchasing the insurance, family members haven't been us..

Bridge design firm is performing an economic analysis : A bridge design firm is performing an economic analysis of two mutually exclusive designs for a highway overpass. The steel girder option has an initial cost of $2.24 million, and the concrete option has an initial cost of $2.52 million. Based on th..

Roofing services suffers from asymmetric information : The market for roofing services suffers from asymmetric information because customers don't know the quality of roofers' work. Which of the following DOES NOT help overcome this information problem?

Health insurance is characterized by asymmetric information : The market for health insurance is characterized by asymmetric information because:

User Account

All Pages