3. The value of information in Economics is clear. Information informs decision making and helps to manage risk and eliminate uncertainty. Asymmetric information occurs in those situations in which an agent has greater information. Consider the following situations with regard to insurance. Can you identify the type of asymmetric information described? Imagine that you work for the insurance companies identified in A and B. What would you recommend the company do to overcome asymmetric information in the insurance business described? A. After a person buys auto insurance for his car, he will generally not care for his car as much as he otherwise would. B. Justina has just finished high school and is about to enter college. When asked if she is going to purchase health insurance, she replies that she does not need it because she is in good health and has no family history of illness. Sam, on the other hand, when asked the same question, says she is going to buy health insurance because she just found out that some of her extended family have been diagnosed with a debilitating genetic condition. 3 C. The Commonwealth of Virginia mandates that all drivers not only have automobile insurance but also carry additional insurance for uninsured drivers. The Commonwealth argues that some drivers will still not purchase insurance, and these uninsured motorists cost other drivers money through higher premiums. Using what you know about economics and asymmetric information, what undergirds the Commonwealth's argument?