Adverse Selection in an Insurance Market With Government-Guaranteed Subsistence Levels
AbstractWe consider a competitive insurance market with adverse selection. Unlike the standard models, we assume that individuals receive the benefit of some type of potential government assistance that guarantees them a minimum level of wealth. For example, this assistance might be some type of government-sponsored relief program, or it might simply be some type of limited liability afforded via bankruptcy laws. Government assistance is calculated "ex post" of any insurance benefits. This alters the individuals' demand for insurance coverage. In turn, this affects the equilibria in various insurance models of markets with adverse selection. Copyright The Journal of Risk and Insurance.
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Bibliographic InfoArticle provided by The American Risk and Insurance Association in its journal The Journal of Risk and Insurance.
Volume (Year): 72 (2005)
Issue (Month): 1 ()
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Other versions of this item:
- Bum J. Kim & Harris Schlesinger, 2004. "Adverse Selection in an Insurance Market with Government-Guaranteed Subsistence Levels," CESifo Working Paper Series 1217, CESifo Group Munich.
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