This paper studies a principal-agent relationship in a contractual crime setting. Suppose an agent and a principal sign a contract stipulating some transfer of funds from one player (say the agent) to the next (the principal) contingent on the state of the world announced by the first player. In...

Concern for risks that stifle investment and contribute to vulnerability of the rural poor is a driving force behind various types of agricultural insurance. Insuring small-scale farmers against crop losses to adverse weather or other hazards has attracted public sector involvement in the...

This paper uses longitudinal data to perform tests of asymmetric information in the French automobile insurance market for the 1995-1997 period. This market is characterized by the presence of a regulated experience-rating scheme (bonus-malus). We demonstrate that the result of the test depends...

Our review aims to assess theoretical and empirical studies concerning the existence,magnitude and threats of information asymmetry in insurance field. Based on the fact that most ofthe papers examined approached both static and dynamic frameworks, a particular emphasis is puton the testable...

The functioning of a modern economy can’t be studied on the basis of neoclassical models. They don’t include such phenomenon as asymmetric and incomplete information. They don’t take into account the possible risks of making decisions and don’t consider such effects of information...

In this paper we explore the possibility that individuals may select insurance coverage in part based on their anticipated behavioral response to the insurance contract. Such "selection on moral hazard" can have important implications for attempts to combat either selection or moral hazard. We...

This paper looks at social insurance of short term absence from work. The chief concern is with efficiency properties of full coverage. That arrangement is reviewed and criticized here in light of received theory. A main point is that positive loading of the premium implies less than full...

Following the financial crisis of 2008/9, there has been renewed interest in what Greenwald and Stiglitz dubbed ‘pecuniary externalities’. Two that affect borrowers and lenders balance sheets in pro-cyclical fashion are described, along with measures that might help curb their destabilising...

Risk classification refers to the use of observable characteristics by insurers to group individuals with similar expected claims, compute the corresponding premiums, and thereby reduce asymmetric information. With perfect risk classification, premiums fully reflect the expected cost associated...

This paper shows results of comparison of the original theoretical conception of modeling human decisions under risk with two well known models. In the paper the demand function for insurance is constructed for the model of maximization of the probability of agent’s (economical) survival. This...