Competition between insurers with superior information
AbstractWe analyze markets where insurers are better informed about risk than consumers. We show that even competitive markets may result in insufficient information revelation and inefficient insurance coverage. This explains why certain risky consumers remain uninsured and why certain market segments are persistently profitable. We also show robustness to competition in menus or mechanisms. Our analysis of the “contrary of adverse selection” (competition between principals with common value and exclusivity) is suitable for other markets (lawyers, doctors, mechanics, etc.).
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Bibliographic InfoPaper provided by Université Paris-Dauphine in its series Open Access publications from Université Paris-Dauphine with number urn:hdl:123456789/5356.
Date of creation: 2005
Date of revision:
Publication status: Published in European economic review (2005) v.49, p.321-340
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Informed principals; Common value; Competition in mechanisms; Insurance markets; Adverse selection;
Other versions of this item:
- Villeneuve, Bertrand, 2005. "Competition between insurers with superior information," European Economic Review, Elsevier, vol. 49(2), pages 321-340, February.
- G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
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