Multiple Choice
Matty and Rudy are the same age,live in the same town,and hold similar jobs a similar distance from their respective homes.They are so similar,in fact,that to the insurance company,they look the same and are offered the same insurance options.However,Matty has never been a particularly good driver and so buys a lot of auto insurance.Rudy,on the other hand,takes pride in being an excellent driver and so only carries the minimum insurance required.This is an example of:
A) adverse selection.
B) risk pooling.
C) risk aversion.
D) diversification.
Correct Answer:
Verified
Correct Answer:
Verified
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