When it comes to insurance some may find it a Moral hazard, this is due to it insurance being misunderstood or misrepresented. One of the top reasons is the premium cost of the insurance, second, some may feel they do not need insurance especially if they are healthy and only need to go to the doctor once a year. Many would also argue that health insurance itself is a moral hazard since it reduces the risks of pursuing an unhealthy lifestyle or other risky behavior. Adverse selection defines as an undesired result due to a situation where a set of employees has more accurate and different information than the other party when it comes to medical condition. The asymmetry causes a lack of efficiency in the price and quantity of goods and services.
