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A Welfare Analysis of Competitive Insurance Markets with Vertical Differentiation and Adverse Selection

MacLeod, W. Bentley - 2023

A feature of many insurance markets is that they combine vertical differentiation (all consumers prefer high to low-coverage policies) and adverse selection (high cost customers prefer high-coverage plans). Building on Novshek and Sonnenschein (1978) and Azevedo and Gottlieb (2017), this paper...

Persistent link: https://www.econbiz.de/10014263157

Selection in Insurance Markets : Theory and Empirics in Pictures

Einav, Liran - 2011

We present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets. We begin by using this framework to review the "textbook" adverse selection environment and its implications for insurance allocation, social welfare, and public policy. We then...

Persistent link: https://www.econbiz.de/10013130983

Imperfect Competition in Selection Markets

Mahoney, Neale - 2016

subprime auto lending calibrated to Einav, Jenkins and Levin (2012), realistic levels of competition among lenders generate a … significant oversupply of credit, implying greater market power is desirable. We build a model of symmetric imperfect competition …-theoretic reasoning to provide a general analysis of the interaction between selection and imperfect competition. We use the same logic to …

Persistent link: https://www.econbiz.de/10013006017

Measuring Ex-Ante Welfare in Insurance Markets

Hendren, Nathaniel - 2018

The willingness to pay for insurance captures the value of insurance against only the risk that remains when choices are observed. This paper develops tools to measure the ex-ante expected utility impact of insurance subsidies and mandates when choices are observed after some insurable...

Persistent link: https://www.econbiz.de/10012922971

Characterization, Existence, and Pareto Optimality in Insurance Markets with Asymmetric Information with Endogenous and Asymmetric Disclosures : Revisiting Rothschild-Stiglitz

Stiglitz, Joseph E. - 2018

We study the Rothschild-Stiglitz model of competitive insurance markets with endogenous information disclosure by both firms and consumers. We show that an equilibrium always exists, (even without the single crossing property), and characterize the unique equilibrium allocation. With two types...

Persistent link: https://www.econbiz.de/10012916614

Deriving Risk Adjustment Payment Weights to Maximize Efficiency of Health Insurance Markets

Layton, Timothy J. - 2016

Risk adjustment of payments to health plans is fundamental to regulated competition among private insurers, which …

Persistent link: https://www.econbiz.de/10012982943

Testing for Adverse Selection in Insurance Markets

Cohen, Alma - 2010

empirical work that seeks to test the basic coverage-risk prediction of adverse selection theory--that is, that policyholders …

Persistent link: https://www.econbiz.de/10013149708

Optimal Taxation with Endogenous Insurance Markets

Golosov, Mikhail; Tsyvinski, Aleh - 2022

We study optimal tax policy in a dynamic private information economy with endogenous private markets. We characterize efficient allocations and competitive equilibria. A standard assumption in the literature is that trades are observable by all agents. We show that in such an environment the...

Persistent link: https://www.econbiz.de/10014066346

Multidimensional Private Information, Market Structure and Insurance Markets

Fang, Hanming - 2016

A large empirical literature found that the correlation between insurance purchase and ex post realization of risk is often statistically insignificant or negative. This is inconsistent with the predictions from the classic models of insurance a la Akerlof (1970), Pauly (1974) and Rothschild and...

Persistent link: https://www.econbiz.de/10012980144

Equilibrium in Competitive Insurance Markets with Moral Hazard

Arnott, Richard J.; Stiglitz, Joseph E. - 2021

This paper examines the existence and nature of competitive equilibrium with moral hazard. The more insurance an individual has, the less care will he take. Consequently, insurance firms attempt to restrict their clients' aggregate insurance purchases. If individuals' aggregate insurance...

Persistent link: https://www.econbiz.de/10013232017

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