Welfare-Improving Asymmetric Information in a Dynamic Insurance Market
AbstractWe provide a two-period model of competition in insurance market under incomplete information. Each agent, together with his initial insurer, learns about his type through accidents, but other insurers may not, depending on informational structures. We show that (i) keeping information about accidents claims private is welfare-improving, (ii) such a policy does not jeopardize the existence of an equilibrium, despite adverse selection arises endogenously, and (iii) this equilibrium exhibits both bonus and malus.
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Bibliographic InfoPaper provided by Laval - Laboratoire Econometrie in its series Papers with number 32.
Length: 51 pages
Date of creation: 1997
Date of revision:
Contact details of provider:
Postal: Chaire d'economie et d'econometrie de l'assurance; DELTA; CREST; PARIS, France.
COMPETITION ; SOCIAL WELFARE ; INSURANCE ; ADVERSE SELECTION;
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
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