The Akerlof model and its lessons can be directly applied to
health insurance markets.
a. In health insurance markets, who is analogous to the car
buyers? The car sellers?
b. What would it mean for the health insurance market to
unravel? Explain.
c. Who is harmed by asymmetric information in insurance markets?
Who is helped? Explain.
d. Suppose private markets offered insurance contracts that
committed people to lifetime insurance. For instance, suppose you
purchase a policy when you are young,...