This study uses game theory to consider the impact of loss control (LC) and monitoring costs on insurers' monitoring activities and investigate how the level of the insurance premium changes monitoring activities. The main results are as follows. First, a firm always undertakes LC when the LC...

This paper investigates explanation investments in a vertically differentiated insurance market. Our main findings reveal that cooperative explanation investment cannot be voluntarily realized because a high-quality insurance firm wishes to deviate from cooperative explanation investment;...