Question
You work for an insurance company. Your boss wants you to design a policy to cover victims of cyber-theft. He wants to offer the same
You work for an insurance company. Your boss wants you to design a policy to cover victims of cyber-theft. He wants to offer the same policy to everyone in the general public for the same price. You tell your boss that his "one price for all" plan is a bad idea. You argue that the company should offer two policies. A cheaper one for people who have encrypted their hard drives before purchasing the policy and a more expensive one for everyone else.Your proposal reflects a concern for the effects of:
( ) Moral hazard.
( ) Adverse selection.
( ) Monopoly pricing.
( ) Both moral hazard and adverse selection.
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