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problem of asymmetric information in insurance
When insuring a good the insurer is uncertain how well the customer will look after a piece of property. For example, if a consumer was careless with locking his bike, the insurer would not want to insure it. This problem can lead to the related problem of adverse selection. To overcome asymmetric…

ation in insurance, insurers will give big discounts for no claims bonuses this is the best way of gaining better information about careful and unlucky consumers.



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