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    Problems Associated with Asymmetric Information

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    Choose an area where someone would have insurance. Now use your knowledge of the problems associated with asymmetric information to explain why the insurance companies might include deductibles as part of their policies.

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    Solution Preview

    One area where one would have insurance is health insurance.

    Asymmetric information means that the person who has health information has better information about her own health than the insurance company. This is assumed by the health insurance company.
    Health insurance companies have deductibles to discourage a large number of small ...

    Solution Summary

    Issues related to asymmetric information are explained in a structured manner in this response. The answer includes references used.

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