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Adverse selection occurs when a class of people buy your product disproportionately (low) compared to the rest of the population, but those that do buy
Adverse selection occurs when a class of people buy your product disproportionately (low) compared to the rest of the population, but those that do buy are inadequately priced. Which of the following situations would most likely point to adverse selection? Please explain answer
a. High rates and high loss ratio | |
b. Low rates and high loss ratio | |
c. High rates and low loss ratio | |
d. Low rates and low loss ratio | |
e. None of the above | |
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