What are some ways of reducing adverse selection in the insurance market?

What will be an ideal response?

Self-selection and signaling may be two ways of reducing adverse selection. Suppose you prefer a low-priced insurance contract with a high deductible, whereas I choose a high-priced contract with $0 deductible. Our self-selection reveals that you are relatively healthier than I am. Similarly, you can also signal to the company through your exercise program and frequent checkups that you are healthier. Some of these could be designed by the company to avoid adverse selection.