Using new technology, some insurers are offering customized rates for buyers who install equipment in their car that monitors speed, acceleration, distance traveled, and other factors. What problems are the insurance companies trying to solve?-Moral hazard, since people who drive badly will not purchase this type of insurance.-Both adverse selection and moral hazard, since only those who know they drive safely will purchase this insurance, and they are less likely to drive dangerously since they know they are being monitored.-Neither adverse selection nor moral hazard. Insurance companies are simply trying to price discriminate.-Adverse selection, since good drivers know they do not need this type of insurance and will shop elsewhere.

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