Question
In 2019, 50 bicycles valued at a total of $10,000 were stolen at a school. In January 2020, Velosurance began offering students the opportunity to
In 2019, 50 bicycles valued at a total of $10,000 were stolen at a school. In January 2020, Velosurance began offering students the opportunity to buy bicycle theft insurance at a price of $10 per month. The insurance pays the replacement cost if the buyer's bicycle is stolen. Not all students take them up on the offer. At the end of the year, crime statistics show that 45 bicycles worth a total value of $12,571 were stolen at the same school in 2020. In addition, there was no change in bicycle theft in the areas surrounding WashU. Can the change in bicycle theft between 2019 and 2020 at the school be explained by moral hazard, adverse selection, both, or neither - and why?
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