Mr. and Mrs. Unger's decision to buy earthquake insurance after moving to California exemplifies which concept?

Mr. and Mrs. Unger's decision to buy earthquake insurance after moving to California illustrates the concept of adverse selection. This term refers to a situation where individuals who perceive themselves to be at higher risk of an adverse event are more likely to seek insurance coverage, compared to those who see themselves at lower risk.

In this scenario, the Ungers recognize that California is prone to earthquakes, which heightens their awareness of the potential risks associated with living in that area. Consequently, they take proactive steps to mitigate their risk by purchasing earthquake insurance. This behavior demonstrates a key aspect of adverse selection, where those who are more likely to file a claim are also more likely to obtain insurance coverage, leading to potential imbalances in the insurance pool if not managed properly.

In contrast, the other concepts mentioned do not align with the Ungers' situation. Misrepresentation involves providing false information to an insurer, redlining refers to discriminatory practices in lending or insurance based on area demographics, and field underwriting pertains to the assessment of risk and verification of information by agents during the insurance application process.