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On the role of patience in an insurance market with asymmetric information
Sonnenholzner, Michael; Wambach, Achim - Center for Financial Studies - 2006
We analyse a 2-period competitive insurance market which is characterized by the simultaneous presence of standard moral hazard and adverse selection with regard to consumer time preferences. It is shown that there exists an equilibrium in which patient consumers use high effort and buy a...
Persistent link: https://www.econbiz.de/10010958723
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ART Versus Reinsurance: The Disciplining Effect of Information Insensitivity
Brandts, Silke; Laux, Christian - Center for Financial Studies - 2005
We provide a novel benefit of Alternative Risk Transfer (ART) products with parametric or index triggers. When a reinsurer has private information about his client's risk, outside reinsurers will price their reinsurance offer less aggressively. Outsiders are subject to adverse selection as only...
Persistent link: https://www.econbiz.de/10010958647
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ART Versus Reinsurance: The Disciplining Effect of Information Insensitivity
Brandts, Silke; Laux, Christian - Center for Financial Studies - 2005
We provide a novel benefit of "Alternative Risk Transfer" (ART) products with parametric or index triggers. When a reinsurer has private information about his client's risk, outside reinsurers will price their reinsurance offer less aggressively. Outsiders are subject to adverse selection as...
Persistent link: https://www.econbiz.de/10005176446
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Public policy and venture capital financed innovation: A contract design approach
Hirsch, Julia - Center for Financial Studies - 2006
The effects of public policy programs which aim at internalizing spill-overs due to successful innovation are analyzed in a sequential double-sided moral hazard doublesided adverse selection framework. The central focus lies in analyzing their impact on contract design. We show that in our...
Persistent link: https://www.econbiz.de/10010958733
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Public Policy and Venture Capital Financed Innovation: A Contract Design Approach
Hirsch, Julia - Center for Financial Studies - 2006
The effects of public policy programs which aim at internalizing spill-overs due to successful innovation are analyzed in a sequential double-sided moral hazard doublesided adverse selection framework. The central focus lies in analyzing their impact on contract design. We show that in our...
Persistent link: https://www.econbiz.de/10005120780
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Hidden regret in insurance markets: Adverse and advantageous selection
Huang, Rachel J.; Muermann, Alexander; Tzeng, Larry Y. - Center for Financial Studies - 2008
We examine insurance markets with two types of customers: those who regret suboptimal decisions and those who don.t. In this setting, we characterize the equilibria under hidden information about the type of customers and hidden action. We show that both pooling and separating equilibria can...
Persistent link: https://www.econbiz.de/10010986404
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Hidden insurance in a moral hazard economy
Bertola, Giuseppe; Koeniger, Winfried - Center for Financial Studies - 2013
We consider an economy where individuals privately choose effort and trade competitively priced securities that pay off with effort-determined probability. We show that if insurance against a negative shock is sufficiently incomplete, then standard functional formrestrictions ensure that...
Persistent link: https://www.econbiz.de/10010958729
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Central counterparties
Koeppl, Thorsten V.; Monnet, Cyril - Center for Financial Studies - 2008
novating trades implements efficient trading behaviour. It is optimal for the CCP to face default losses to achieve the … efficient level of trade. To cover these losses, the CCP optimally uses margin calls, and, as the default problem becomes more … severe, also requires default funds and then imposes position limits. …
Persistent link: https://www.econbiz.de/10010958500
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Mutual versus stock insurers: Fair premium, capital, and solvency
Laux, Christian; Muermann, Alexander - Center for Financial Studies - 2006
Mutual insurance companies and stock insurance companies are different forms of organized risk sharing: policyholders and owners are two distinct groups in a stock insurer, while they are one and the same in a mutual. This distinction is relevant to raising capital, selling policies, and sharing...
Persistent link: https://www.econbiz.de/10010958690
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Mutual versus Stock Insurers: Fair Premium, Capital, and Solvency
Laux, Christian; Muermann, Alexander - Center for Financial Studies - 2006
Mutual insurance companies and stock insurance companies are different forms of organized risk sharing: policyholders and owners are two distinct groups in a stock insurer, while they are one and the same in a mutual. This distinction is relevant to raising capital, selling policies, and sharing...
Persistent link: https://www.econbiz.de/10005120775