Question: Some auto insurance providers offer a program in which the company tracks a drivers habits and adjusts their insurance rates accordingly; those who drive safely

  1. Some auto insurance providers offer a program in which the company tracks a drivers habits and adjusts their insurance rates accordingly; those who drive safely and follow traffic laws are rewarded with lower rates. [2]

    1. What type of market failure does this program address?

    2. Would you expect a program like this improve the efficiency of the auto insurance market? Explain your answer.

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