Without knowledge about driver types, all insured drivers get the same deal. There is a pooling equilibrium

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Without knowledge about driver types, all insured drivers get the same deal. There is a pooling equilibrium like that in the used-car market without dealer warranties. Careful drivers and aggressive drivers pay the same premium, but the insurance companies incur losses on aggressive drivers and make profits on careful drivers.

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Foundations Of Microeconomics

ISBN: 9780134491981

8th Edition

Authors: Robin Bade, Michael Parkin

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