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Mandatory Pensions and the Intensity of Adverse Selection in Life Insurance Markets

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  • Bertrand Villeneuve

Abstract

This article examines the impact of varying mandatory pensions on saving, life insurance, and annuity markets in an adverse selection economy. Under reasonable restrictions, we find unambiguous effects on market size, participation rates, and equilibrium prices. The degree of adverse selection, whether a market is active or inactive, and social welfare are analyzed.

Suggested Citation

  • Bertrand Villeneuve, 2003. "Mandatory Pensions and the Intensity of Adverse Selection in Life Insurance Markets," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 70(3), pages 527-548, September.
    • Handle: RePEc:bla:jrinsu:v:70:y:2003:i:3:p:527-548
    DOI: 10.1111/1539-6975.t01-1-00063
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    Cited by:

    1. Attar, Andrea & Mariotti, Thomas & Salanié, François, 2014. "Multiple Contracting in Insurance Markets," TSE Working Papers 14-532, Toulouse School of Economics (TSE), revised Sep 2016.
    2. Angus Macdonald & Pradip Tapadar, 2010. "Multifactorial Genetic Disorders and Adverse Selection: Epidemiology Meets Economics," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 77(1), pages 155-182, March.
    3. M. Martin Boyer, 2018. "La gestion et le dépistage des risques liés au vieillissement, et le rôle des régimes de retraite dans le marché de l’assurance de soins de longue durée," CIRANO Project Reports 2018rp-03, CIRANO.
    4. Ben Heijdra & Laurie Reijnders, 2012. "Adverse Selection in Private Annuity Markets and the Role of Mandatory Social Annuitization," De Economist, Springer, vol. 160(3), pages 311-337, September.
    5. repec:dau:papers:123456789/14060 is not listed on IDEAS
    6. Georges Dionne & Casey G. Rothschild, 2011. "Risk Classification in Insurance Contracting," Cahiers de recherche 1137, CIRPEE.
    7. Ben J. Heijdra & Yang Jiang & Jochen O. Mierau, 2019. "The Macroeconomic Effects of Longevity Risk Under Private and Public Insurance and Asymmetric Information," De Economist, Springer, vol. 167(2), pages 177-213, June.
    8. Martin Boyer & Franca Glenzer, 2016. "Pensions, annuities, and long-term care insurance: On the impact of risk screening," Cahiers de recherche 1603, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    9. Georges Dionne & Casey Rothschild, 2014. "Economic Effects of Risk Classification Bans," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 39(2), pages 184-221, September.
    10. Nan Zhu & Daniel Bauer, 2013. "Coherent Pricing of Life Settlements Under Asymmetric Information," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 80(3), pages 827-851, September.
    11. Andrea Attar & Thomas Mariotti & François Salanié, 2022. "Regulating Insurance Markets: Multiple Contracting And Adverse Selection," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 63(3), pages 981-1020, August.
    12. Jennifer L. Wang & Ching‐Fan Chung & Larry Y. Tzeng, 2008. "An Empirical Analysis of the Effects of Increasing Deductibles on Moral Hazard," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(3), pages 551-566, September.
    13. Eric Stephens & James R. Thompson, 2015. "Separation Without Exclusion in Financial Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 82(4), pages 853-864, December.
    14. Carlos Vidal-Melia & Ana Lejárraga-García, 2004. "The Bequest Motive And Single People’S Demand For Life Annuities," Public Economics 0405005, University Library of Munich, Germany.
    15. Stephens, Eric & Thompson, James, 2012. "Separation Without Mutual Exclusion in Financial Insurance," Working Papers 2012-8, University of Alberta, Department of Economics.
    16. J. Iñaki De La Peña & M. Cristina Fernández-Ramos & Asier Garayeta, 2021. "Cost-Free LTC Model Incorporated into Private Pension Schemes," IJERPH, MDPI, vol. 18(5), pages 1-16, February.
    17. Bertrand Villeneuve, 2014. "Mortgage life insurance: a rationale for a time limit in switching rights," Post-Print hal-01685921, HAL.
    18. Raduna, Daniela Viviana & Roman, Mihai Daniel, 2011. "Risk aversion influence on insurance market," MPRA Paper 37725, University Library of Munich, Germany, revised 01 Feb 2012.
    19. M. Martin Boyer & Franca Glenzer, 2021. "Pensions, annuities, and long-term care insurance: on the impact of risk screening," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 46(2), pages 133-174, September.
    20. Casey Rothschild & Paul D. Thistle, 2022. "Supply, demand, and selection in insurance markets: Theory and applications in pictures," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 25(4), pages 419-444, December.
    21. Thomas Mariotti, 2016. "Multiple Contracting in Insurance Markets," 2016 Meeting Papers 820, Society for Economic Dynamics.

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