S/F/127. Testing propositions involving information asymmetries is inherently difficult. Discuss in the light of the available evidence for the existence of adverse selection in insurance markets. Is it possible to distinguish between different equilibrium concepts?
(2005, 1500 words)
The paper examines the concept of adverse selection in insurance markets looking at the causes and consequences of the information asymmetry, their outcomes in insurance markets, types of insurance contract, the concepts of equilibrium, etc.
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