Learn Before
Prioritizing Risks in Academic Insurance
Imagine an insurance company is considering offering a policy that pays students if they receive a final grade below a 'C' in a course. The company's analysts are concerned about two potential issues: 1) The possibility that students who are already struggling or less motivated will be the most likely to buy the policy, and 2) The possibility that students who buy the policy might reduce their study efforts. In your judgment, which of these two problems poses a more fundamental and difficult-to-solve challenge to the long-term profitability of this type of insurance? Justify your reasoning.
0
1
Tags
Systems
Science
Physical Science
Economics
Economy
Social Science
Empirical Science
CORE Econ
Ch.10 Market successes and failures: The societal effects of private decisions - The Economy 2.0 Microeconomics @ CORE Econ
The Economy 2.0 Microeconomics @ CORE Econ
Introduction to Microeconomics Course
Evaluation in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
A company proposes to sell 'grade insurance' to university students. The policy would pay a student $1,000 if they receive a final grade below a 'B' in a specific course. From an economic perspective, which of the following is the most significant reason this market is unlikely to function successfully?
Analysis of an Uninsurable Risk Market
Viability of Academic Performance Insurance
Profitability of Academic Insurance
The primary reason private insurance companies do not offer policies against receiving a low grade in a course is that the financial loss associated with a poor grade is too small for students to be willing to pay the premiums.
An insurance company is exploring two different ways to market a new 'Grade Protection' policy. However, each marketing approach highlights a different fundamental economic problem that makes such insurance difficult to provide. Match each scenario with the primary economic problem it illustrates.
A company introduces an insurance policy that pays students if they fail a course. Arrange the following events in the logical sequence that demonstrates how a change in student behavior can lead to the failure of this insurance market.
A student who purchases an insurance policy that pays out if they receive a low grade may subsequently reduce their study effort, knowing they are protected from the full financial or academic consequence of a poor result. This change in behavior, which increases the likelihood of the insurance company having to pay a claim, is a classic example of ____.
Evaluating a Proposed Solution for Academic Insurance
Prioritizing Risks in Academic Insurance
Profitability of Academic Insurance