Private insurance raises issues of adverse selection

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Reference no: EM131005058

Private insurance raises issues of adverse selection and moral hazard. Consider insurance that compensates professional athletes for injuries that result in lost income.

A. Illustrate how adverse selection could be a problem for this type of insurance.

B. Illustrate how moral hazard could arise for this type of insurance.

C. Could society eliminate the problem of adverse selection? If so, how? Could society eliminate the problem of moral hazard? If so, how?

Reference no: EM131005058

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