Role of Panel Analysis in Identifying Asymmetric Information with Optional Unit Provision in Federal Crop Insurance
AbstractThis paper has a two-fold contribution, first we demonstrate the relationship of spatial, temporal and residual yield risk estimated from a two-way panel random effects model to asymmetric information with an optional unit provision in the federal crop insurance program. Second, the yield risk components are incorporated in a discrete choice model to examine the presence of asymmetric information due to potential yield switching with optional unit provisions. Empirical application to 1998 U.S. cotton crop insurance data reveals the presence of asymmetric information with optional unit provisions.
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Bibliographic InfoPaper provided by North Dakota State University, Department of Agribusiness and Applied Economics in its series Agribusiness & Applied Economics Report with number 54983.
Date of creation: Mar 2009
Date of revision:
Adverse Selection; Moral Hazard; Optional Unit Policy; Crop Insurance; U.S. Cotton; Crop Production/Industries; Demand and Price Analysis; D82; G22; Q10;
Find related papers by JEL classification:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
- Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2009-12-05 (Agricultural Economics)
- NEP-ALL-2009-12-05 (All new papers)
- NEP-CTA-2009-12-05 (Contract Theory & Applications)
- NEP-IAS-2009-12-05 (Insurance Economics)
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