This article attempts to understand the outcomes when each party of an insurance contract simultaneously has superior information. I assume that policyholders have superior information about specific risks while insurers have superior information about general risks. I find that low-general-risk...

This paper presents a model in which firms compete in a Cournot-Nash game. Firms can choose an exclusive agency (EA) or an independent agency (IA) distribution system. Firms can enter and exit the market and switch distribution systems with no cost. The only difference between an EA system and...

The theory of information asymmetry has explained the coexistence of stock and mutual companies in the insurance market. However, there is discrepancy between the theory and empirical findings. This paper proposes a simple theory to fill the gap between the theory and empirical findings. Our...

We compare two prominent approaches to capital allocation in insurance firms. The financial theory approach includes Merton and Perold (1993) and Myers and Read (2001). The cooperative game theory approach utilizes concepts such as the Shapley value and the Aumann-Shapley value. We argue that,...