Adverse selection and moral hazard in health insurance markets

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My thesis is, Although health insurance has been one of the most profitable businesses in the world, it faces numerous challenges. This research study focuses on adverse selection and moral hazards and how they affect the world health insurance market. It focuses on explaining the adverse selection and moral hazards using the game theory and classical contribution of Rothschild and Stiglitz on equilibrium refinements and second-best theory. George Akerlof’s lemon principle also expounds on the adverse selection. Moral hazards will be delved into using the Ehrlich and Becker model theory. However, the central aspect of this paper looks at the potential solutions that may be used to address the effect of adverse selection and moral hazards on the health insurance markets.

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