Information, Risk, and Insurance (Economics)

Recall cards on imperfect information, asymmetric information, and insurance. The problem of imperfect information: thin markets, price as a quality signal, the lemon problem, and the mechanisms that reduce it (guarantees, warranties, reputation, occupational licenses, credentials, probationary periods, cosigners, collateral, and credit checks). Insurance and imperfect information: risk pooling, premiums, the fundamental law of insurance, deductibles, copayments, and coinsurance, plus adverse selection, moral hazard, actuarially fair pricing, risk classification, mandatory coverage, and health maintenance organizations.