We analyze the effect of ambiguous loss probabilities on competitive insurance markets with asymmetric information. We characterize equilibria under actuarially fair pricing with preferences that are second-order ambiguity averse (have smooth indifference curves). We also show existence of...

Kenneth Arrow and Karl Borch published several important articles in the early 1960s that can be viewed as the beginning of modern economic analysis of insurance activity. This chapter reviews the main theoretical and empirical contributions in insurance economics since that time. The review...

In this study, we assess the relevance of decreasing information asymmetry on life and nonlife insurance consumption, by using data from 48 African countries during the period 2004-2014. Reduced information asymmetry is proxied by information sharing offices, namely: public credit registries and...

Bundling credit with insurance contracts is a common approach to increasing insurance take-up, especially in low income-environments. I document that this approach can induce adverse selection in insurance; thus, acting as an important source of inefficiency

We consider a model of competitive insurance markets under asymmetric information with ambiguity-averse agents who maximize their maxmin expected utility. The interaction between asymmetric information and ambiguity aversion gives rise to some interesting results. First, for some parameter...

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 increase in ambiguity leads to a strict Pareto...

We consider a model of competitive insurance markets under asymmetric information with ambiguity-averse agents who maximize their maxmin expected utility. The interaction between asymmetric information and ambiguity aversion gives rise to some interesting results. First, for some parameter...

Bundled insurance contracts, providing protection based on several loss coverages, are attractive because they allow insurers to focus on the needs of the policyholder. A common contract feature is a deductible set so that the insurance pays the excess over the deductible of the sum of losses...

Shows equilibrium always exists (Rothschild-Stiglitz-Wilson model) when firms enforce policy exclusivity via strategic (profit-maximizing) communication of client purchases. Strategic communication induces two equilibrium types: partial communication of purchase information or non-communication...

This paper analyzes the impact of biased beliefs on the structure of informational equilibria in classical self-selection models. While the assessment of an individual's type is biased, they still possess relevant "residual private information." Using the insurance market example of...