According to the theory of propitious selection:

According to the theory of propitious selection:

ÿ
ÿ

risk-neutral people are more likely to opt for insurance
coverage.

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ÿ

risk-averse people are more likely to opt for insurance
coverage.

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ÿ

high-risk people submit large claims for insurance coverage.

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ÿ

high-risk people submit smaller claims for insurance
coverage.