Evidence of Adverse Selection in the Group Insurance Market
AbstractThis paper demonstrates the existence of adverse selection in the group insurance market with no individual choice. We provide evidence against the “conventional wisdom” that group insurance mitigates adverse selection because of the mixture of high risks and low risks. We show, however, that asymmetric learning effects mitigate the group adverse selection after a few policy periods.
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Bibliographic InfoPaper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1403.
Length: 29 pages
Date of creation:
Date of revision:
Information Asymmetry; Asymmetric Learning; Insurance Decision; Group Health Insurance; Critical Illness Insurance;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-03-08 (All new papers)
- NEP-CDM-2014-03-08 (Collective Decision-Making)
- NEP-CTA-2014-03-08 (Contract Theory & Applications)
- NEP-HEA-2014-03-08 (Health Economics)
- NEP-IAS-2014-03-08 (Insurance Economics)
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