An Econometric Analysis of Insurance Markets with Separate Identification for Moral Hazard and Selection Problems
AbstractThis paper proposes a simple econometric framework that can identify moral hazard and selection problems separately in insurance markets. Although our methodology requires behavioral assumptions on the consumer's optimization, we show that these assumptions are necessary for the separate identification of the two sources of information asymmetry. Our method is applied to the dental insurance market in the United States. In addition to standard moral hazard, we find advantageous selection, which is not detected by a conventional methodology.
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Bibliographic InfoPaper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-849.
Length: 33 pages
Date of creation: Apr 2012
Date of revision:
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-23 (All new papers)
- NEP-COM-2012-04-23 (Industrial Competition)
- NEP-CTA-2012-04-23 (Contract Theory & Applications)
- NEP-HEA-2012-04-23 (Health Economics)
- NEP-IAS-2012-04-23 (Insurance Economics)
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