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Le Risque Moral et la Selection Adverse: une Revue Critique de la Litterature

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  • Dionne, G.

Abstract

In this paper, we present a survey of the two main problems of information in insurance markets: moral hazard and adverse selection. Both arise because the insurers are less informed than the insureds. Moral hazard is explained by the fact that the insurer cannot observe, ex ante, the activities of the insured who may have the incentive to change the state of the world in response to insurance coverage. Adverse selection arises since the insurer cannot determine without costs, the risks inherent in the individuals. After defining formally these two problems, we shall present different insurance strategies (private and public) with a view to correct them. In conclusion we shall propose some avenues of research.

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Bibliographic Info

Paper provided by Universite de Montreal, Departement de sciences economiques in its series Cahiers de recherche with number 8006.

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Length: 40P. pages
Date of creation: 1980
Date of revision:
Handle: RePEc:mtl:montde:8006

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Keywords: Risque ; Incertitude ; Assurance ; Information;

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References

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  1. Spence, Michael & Zeckhauser, Richard, 1971. "Insurance, Information, and Individual Action," American Economic Review, American Economic Association, vol. 61(2), pages 380-87, May.
  2. Johnson, William R, 1978. "Overinsurance and Public Provision of Insurance: Comment," The Quarterly Journal of Economics, MIT Press, vol. 92(4), pages 693-96, November.
  3. Steven Shavell, 1979. "Risk Sharing and Incentives in the Principal and Agent Relationship," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 55-73, Spring.
  4. Joseph P. Newhouse & Charles E. Phelps, 1976. "New Estimates of Price and Income Elasticities of Medical Care Services," NBER Chapters, in: The Role of Health Insurance in the Health Services Sector, pages 261-320 National Bureau of Economic Research, Inc.
  5. Marshall, John M, 1976. "Moral Hazard," American Economic Review, American Economic Association, vol. 66(5), pages 880-90, December.
  6. Spence, Michael, 1978. "Product differentiation and performance in insurance markets," Journal of Public Economics, Elsevier, vol. 10(3), pages 427-447, December.
  7. Rosett, Richard N & Huang, Lien-fu, 1973. "The Effect of Health Insurance on the Demand for Medical Care," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages 281-305, Part I, M.
  8. Radner, Roy, 1970. "Problems in the Theory of Markets under Uncertainty," American Economic Review, American Economic Association, vol. 60(2), pages 454-60, May.
  9. Dionne, G., 1980. "Moral Hazard and State-Dependent Utility Function," Cahiers de recherche 8053, Universite de Montreal, Departement de sciences economiques.
  10. Helpman, Elhanan & Laffont, Jean-Jacques, 1975. "On moral hazard in general equilibrium theory," Journal of Economic Theory, Elsevier, vol. 10(1), pages 8-23, February.
  11. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  12. Spence, Michael, 1976. "Informational Aspects of Market Structure: An Introduction," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 591-97, November.
  13. Milton Friedman & L. J. Savage, 1948. "The Utility Analysis of Choices Involving Risk," Journal of Political Economy, University of Chicago Press, vol. 56, pages 279.
  14. Arrow, Kenneth J & Lind, Robert C, 1970. "Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 60(3), pages 364-78, June.
  15. Feldstein, Martin S, 1971. "Hospital Cost Inflation: A Study of Nonprofit Price Dynamics," American Economic Review, American Economic Association, vol. 61(5), pages 853-72, December.
  16. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
  17. Gardner, Roy, 1979. "The Arrow-Lind Theorem in a Continuum Economy," American Economic Review, American Economic Association, vol. 69(3), pages 420-22, June.
  18. Gould, John P, 1969. "The Expected Utility Hypothesis and the Selection of Optimal Deductibles for a Given Insurance Policy," The Journal of Business, University of Chicago Press, vol. 42(2), pages 143-51, April.
  19. William Johnson, 1977. "Choice of compulsory insurance schemes under adverse selection," Public Choice, Springer, vol. 31(1), pages 23-35, September.
  20. Kihlstrom, Richard E. & Mirman, Leonard J., 1974. "Risk aversion with many commodities," Journal of Economic Theory, Elsevier, vol. 8(3), pages 361-388, July.
  21. Shavell, Steven, 1979. "On Moral Hazard and Insurance," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 541-62, November.
  22. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  23. Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
  24. Dionne, G., 1979. "Moral Hazard and Search Activity," Cahiers de recherche 7944, Universite de Montreal, Departement de sciences economiques.
  25. Stiglitz, Joseph E, 1969. "Behavior Towards Risk with Many Commodities," Econometrica, Econometric Society, vol. 37(4), pages 660-67, October.
  26. Crew, Michael A, 1969. "Coinsurance and the Welfare Economics of Medical Care," American Economic Review, American Economic Association, vol. 59(5), pages 906-08, December.
  27. Riley, John G, 1979. "Noncooperative Equilibrium and Market Signalling," American Economic Review, American Economic Association, vol. 69(2), pages 303-07, May.
  28. Cook, Philip J & Graham, Daniel A, 1977. "The Demand for Insurance and Protection: The Case of Irreplaceable Commodities," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 143-56, February.
  29. Friedman, Bernard, 1974. "Risk Aversion and the Consumer Choice of Health Insurance Option," The Review of Economics and Statistics, MIT Press, vol. 56(2), pages 209-14, May.
  30. Demsetz, Harold, 1969. "Information and Efficiency: Another Viewpoint," Journal of Law and Economics, University of Chicago Press, vol. 12(1), pages 1-22, April.
  31. Kihlstrom, Richard & Pauly, Mark, 1971. "The Role of Insurance in the Allocation of Risk," American Economic Review, American Economic Association, vol. 61(2), pages 371-79, May.
  32. Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
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