Thus, the government solved the adverse selection problem by making a single price (have health insurance or pay a fixed fine) and forcing everybody to have insurance. Hopefully the incidence of this new usage lies most heavily on preventative care which will generally reduce healthcare costs (a point that many will concede yet say it is overreaching).But, now that I am paying for my neighbor, how am I going to feel about him eating Mc Donald’s once a week?One of the issues that insurance companies, used car salesmen, online dating websites and credit companies deal with is adverse selection.
A hilarious, thought-provoking, must-read manual for anybody who wants to find The One and learn why love and the economy make for highly entertaining bedfellows.” Sam Yagan, cofounder, Ok Cupid, and CEO, Match.com “I thought I knew a lot about online dating and a lot about economics, too. Since 2008, the field of economics has suffered from a range of misconceptions.People all over the world have been grumbling, “What’s the point of having economists if they cannot even foresee—much less prevent—an economic crisis?The government foresaw this problem and made it mandatory for everybody to have health insurance.There are other reasons for this with more compelling and understandable aims: for two examples, insurance encourages preventative medicine and emergency rooms are over-saturated with uninsured.And how can we deal with the adverse selection problem of insurance when insurance moves to politics… Simply put, any entitlement program is a re-distribution of wealth.There is no way around this fact and only debate is whether it is appropriate or efficient.This is the reason why insurance and credit card companies allow you to self-select into different cost structures with different prices.This is where the nuance comes in: if you allow people to choose, only those who require the insurance (chronic illnesses, etc.) will buy it and those who are generally healthy will not – a concept known as .Introduction 11 Search Theory 5Deciding When to Settle2 Cheap Talk 25Hedges, Omissions, and Just Plain Lies3 Network Externalities 43The Facebook Effect4 Signaling 63Putting Your Money Where Your Mouth Is5 Statistical Discrimination 91Stereotypes6 Thick Versus Thin Markets 111Big Fish or Big Pond?7 Adverse Selection 131Stigma8 Positive Assortative Mating 149Why Everyone in the Office and the Neighborhood Is Similar9 The Returns to Skills 169Education and Good Looks Pay10 The Family 189Negotiating at Home Epilogue 211Notes 217Index 227Acknowledgments 239About the Author 243 Advance Praise for Everything I Ever Needed to Know About Economics I Learned From Online Dating : Lori Gottlieb, New York Times bestselling author, Marry Him: The Case for Settling for Mr.