This paper questions how heterogeneity of beliefs about the probability of loss affects equilibrium insurance contracts … assumption of prior work, is violated. This paper shows that optimistic individuals could result in insurance driving out …. These results are not only consistent with empirical evidence from several insurance markets on correlation of risk and …

calibrated model of employer-sponsored health insurance, we show that the risk adjustment commonly used by employers to offset …

insurance, we show that the risk adjustment commonly used to offset adverse selection can reduce the amount of coverage and …

often negotiate a settlement to avoid a costly trial. Liability insurance creates bargaining leverage for the defendant in … is a substantial source of value for insurance. Our results show that under adverse selection, a monopolist offers at … competitive market, only a pooling equilibrium with under-insurance may exist …