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6. Consider the model of adverse selection in insurance markets discussed extensively in the lectures of Week 3. (a) Briefly discuss the setup of the

6. Consider the model of adverse selection in insurance markets discussed extensively in the lectures of Week 3. (a) Briefly discuss the setup of the model. (b) Explain what a pooling/separating equilibrium of the model is. (c) Explain when/whether a pooling/separating equilibrium exists.

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Recommended Textbook for

Auditing and Assurance Services

Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws

6th edition

978-1259197109, 77632281, 77862341, 1259197107, 9780077632281, 978-0077862343

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