Optimal Coverage Level Choice with Individual and Area Plans of Insurance
AbstractWe theoretically examine a farmer’s coverage demand with area and individual insurance plans as either separate or integrated options. The individual and area losses are assumed to be imperfectly and positively correlated. With actuarially fair rates, the farmer will fully insure with the individual plan and demand no area insurance regardless of the plans being separate or integrated. Under separate plans, free area insurance and the fair rate for individual insurance, area insurance replaces a portion of individual insurance demand. Under integrated plans, free area insurance, and the fair rate for individual insurance, the farmer will over-insure with individual plan and demand additional area insurance.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania with number 103185.
Date of creation: 26 Apr 2011
Date of revision:
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Agricultural risk; area plans of insurance; crop insurance; Agricultural and Food Policy; Agricultural Finance; Crop Production/Industries; Demand and Price Analysis; Farm Management; Financial Economics; Industrial Organization; Marketing; Production Economics; Research Methods/ Statistical Methods; Risk and Uncertainty; D81; G22; Q12; Q18;
Other versions of this item:
- Bulut, Harun & Collins, Keith J. & Zacharias, Thomas P., 2011. "Optimal Coverage Level Choice with Individual and Area Plans of Insurance," 2011 Annual Meeting, February 5-8, 2011, Corpus Christi, Texas 98803, Southern Agricultural Economics Association.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
- Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2011-05-07 (Agricultural Economics)
- NEP-ALL-2011-05-07 (All new papers)
- NEP-IAS-2011-05-07 (Insurance Economics)
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- Bulut, Harun & Collins, Keith J., 2013. "Political Economy of Crop Insurance Risk Subsidies under Imperfect Information," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150577, Agricultural and Applied Economics Association.
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