Separating Moral Hazard from Adverse Selection and Learning in Automobile Insurance: Longitudinal Evidence from France
AbstractThe identification of information problems in different markets is a challenging issue in the economic literature. In this paper, we study the identification of moral hazard from adverse selection and learning within the context of a multi-period dynamic model. We extend the model of Abbring et al. (2003) to include learning and insurance coverage choice over time. We derive testable empirical implications for panel data. We then perform tests using longitudinal data from France during the period 1995-1997. We find evidence of moral hazard among a sub-group of policyholders with less driving experience (less than 15 years). Policyholders with less than 5 years of experience have a combination of learning and moral hazard, whereas no residual information problem is found for policyholders with more than 15 years of experience.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by CIRPEE in its series Cahiers de recherche with number 1035.
Date of creation: 2010
Date of revision:
Moral hazard; adverse selection; learning; dynamic insurance contracting; panel data; empirical test;
Other versions of this item:
- Georges Dionne & Pierre-Carl Michaud & Maki Dahchour, 2013. "Separating Moral Hazard From Adverse Selection And Learning In Automobile Insurance: Longitudinal Evidence From France," Journal of the European Economic Association, European Economic Association, vol. 11(4), pages 897-917, 08.
- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models &bull Diffusion Processes
- C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-02 (All new papers)
- NEP-CTA-2010-10-02 (Contract Theory & Applications)
- NEP-IAS-2010-10-02 (Insurance Economics)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Balafoutas, Loukas & Kerschbamer, Rudolf & Sutter, Matthias, 2013.
"Second-Degree Moral Hazard in a Real-World Credence Goods Market,"
IZA Discussion Papers
7714, Institute for the Study of Labor (IZA).
- Loukas Balafoutas & Rudolf Kerschbamer & Matthias Sutter, 2013. "Second-Degree Moral Hazard in a Real-World Credence Goods Market," CESifo Working Paper Series 4458, CESifo Group Munich.
- Loukas Balafoutas & Rudolf Kerschbamer & Matthias Sutter, 2013. "Second-Degree Moral Hazard in a Real-World Credence Goods Market," Economics Working Papers ECO2013/08, European University Institute.
- Loukas Balafoutas & Rudolf Kerschbamer & Matthias Sutter, 2013. "Second-Degree Moral Hazard in a Real-World Credence Goods Market," Working Papers 2013-26, Faculty of Economics and Statistics, University of Innsbruck.
- Georges Dionne & Nathalie Fombaron & Neil Doherty, 2012. "Adverse Selection in Insurance Contracting," Cahiers de recherche 1231, CIRPEE.
- Georges Dionnne & Pierre-Carl Michaud & Jean Pinquet, 2012.
"A Review of Recent Theoretical and Empirical Analyses of Asymmetric Information in Road Safety and Automobile Insurance,"
Cahiers de recherche
- Dionne, Georges & Michaud, Pierre-Carl & Pinquet, Jean, 2013. "A review of recent theoretical and empirical analyses of asymmetric information in road safety and automobile insurance," Research in Transportation Economics, Elsevier, vol. 43(1), pages 85-97.
- Shi, Peng & Valdez, Emiliano A., 2011. "A copula approach to test asymmetric information with applications to predictive modeling," Insurance: Mathematics and Economics, Elsevier, vol. 49(2), pages 226-239, September.
- Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Johanne Perron).
If references are entirely missing, you can add them using this form.