The asymmetric information problem has been widely discussed in the context of insurance markets. Most of previous research usually treats adverse selection and moral hazard separately, though it is quite possible that they may coexist and interact with each other. In this paper, we build a...

Most of the previous research in the asymmetric information problem treats adverse selection and moral hazard separately, though they may coexist and interact with each other. We build a principal-agent model to examine optimal contracts in a competitive insurance market facing adverse selection...