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We consider a model of competitive insurance markets involving both asymmetric information and ambiguity about the … accident probability. We show that there can exist a full-insurance pooling equilibrium. We also present an example where an … constraint and allows low risks to buy more insurance. Higher ambiguity also deteriorates the low risks' expected utility from …
Persistent link: https://www.econbiz.de/10012905578
We consider a model of competitive insurance markets under asymmetric information with ambiguity-averse agents who … insurees buy full insurance. Second, in separating equilibria where the low risks are underinsured their equilibrium contract …
Persistent link: https://www.econbiz.de/10012905983
I model financial markets that structure decision-making into discrete points separating contract offers, applications, and acceptance/denial decisions. Endogenous beliefs about applicants' risk types emerge as the institutional process extracts private information allowing uninformed firms...
Persistent link: https://www.econbiz.de/10012895149
How does catastrophe-risk awareness affect selection patterns in catastrophe insurance markets? Catastrophe insurance … informational advantage. I study this issue using data on take-up rates of earthquake insurance in California, where there is both a … find that within the same rating territory, there is a positive correlation between risk and take-up for insurance …
Persistent link: https://www.econbiz.de/10012899971
We show that on-demand insurance contracts, an innovative form of coverage recently introduced through the InsurTech …
Persistent link: https://www.econbiz.de/10012822927
Adverse selection and moral hazard are different types of information asymmetry in the insurance market, but their … current claim numbers under experience rating. We conduct the test on the auto insurance data from a Chinese large domestic … than adverse selection in this auto insurance market. Besides, the negative coefficient has a larger magnitude for drivers …
Persistent link: https://www.econbiz.de/10012867165
This paper reviews and evaluates the empirical literature on adverse selection in insurance markets. We focus on … who purchase more insurance coverage tend to be riskier. The analysis of this body of work, we argue, indicates that … whether such a correlation exists varies across insurance markets and pools of insurance policies. We discuss various reasons …
Persistent link: https://www.econbiz.de/10012976758
on contract choice and risk in automobile insurance. The number of car rides and the relative distance driven on weekends …
Persistent link: https://www.econbiz.de/10013008136
." Using the insurance market example of Rothschild-Stiglitz (1976) I show that biases of high-risk individuals have … is possible, that a breakdown of the insurance market occurs. This extreme result is more likely in insurance markets …
Persistent link: https://www.econbiz.de/10013054267
This paper characterizes the optimal information structure in insurance markets in the presence of adverse selection …
Persistent link: https://www.econbiz.de/10012933060