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Liability, Insurance and the Incentive to Obtain Information about Risk

Author

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  • Vickie Bajtelsmit

    (Department of Finance and Real Estate, Colorado State University, Ft. Collins, CO 80523, U.S.A)

  • Paul Thistle

    (Department of Finance, University of Nevada Las Vegas, Las Vegas, NV, 89154, U.S.A)

Abstract

We examine the incentives to obtain information about risk under strict liability and negligence rules when insurance is available. Information helps reduce the expected cost of accidents, but also exposes the potential injurer to classification risk. As a result, the social value of information may be negative. Under both strict liability and negligence, the private value of information may also be negative when insurance is available.

Suggested Citation

  • Vickie Bajtelsmit & Paul Thistle, 2015. "Liability, Insurance and the Incentive to Obtain Information about Risk," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 40(2), pages 171-193, September.
    • Handle: RePEc:pal:genrir:v:40:y:2015:i:2:p:171-193
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    Cited by:

    1. Vickie Bajtelsmit & Jennifer Coats & Paul Thistle, 2015. "The effect of ambiguity on risk management choices: An experimental study," Journal of Risk and Uncertainty, Springer, vol. 50(3), pages 249-280, June.

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