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When prices hardly matter: Incomplete insurance contracts and markets for repair goods

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  • Martin Nell

    (University of Hamburg)

  • Andreas Richter

    (Illinois State University)

  • Jörg Schiller

    (WHU – Otto Beisheim Graduate School of Management)

Abstract

This paper looks at markets characterized by the fact that the demand side is insured. In these markets a consumer purchases a good to compensate consequences of unfavorable events, such as an accident or an illness. Insurance policies in most lines of insurance base indemnity on the insured’s actual expenses, i.e., the insured would be partially or completely reimbursed when purchasing certain goods. In this setting we discuss the interaction between insurance and repair markets by focusing, on the one hand, upon the development of prices and the market structure in markets with insured customers, and, on the other hand, the resulting backlash on optimal insurance contracting.

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File URL: http://128.118.178.162/eps/ri/papers/0501/0501002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Risk and Insurance with number 0501002.

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Length: 29 pages
Date of creation: 14 Jan 2005
Date of revision:
Handle: RePEc:wpa:wuwpri:0501002

Note: Type of Document - pdf; pages: 29
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Web page: http://128.118.178.162

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Keywords: Incomplete Contracts; Insurance; Repair Markets;

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References

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Cited by:
  1. Andreas Richter & Jörg Schiller & Harris Schlesinger, 2014. "Behavioral insurance: Theory and experiments," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 85-96, April.
  2. M. Martin Boyer & Jörg Schiller, 2003. "Merging Automobile Insurance Regulatory Bodies: The Case of Atlantic Canada," CIRANO Working Papers 2003s-70, CIRANO.
  3. Boyer, M. Martin & Schiller, Jörg, 2003. "Merging automobile regulatory bodies: The case of Atlantic Canada," Working Papers on Risk and Insurance 11, University of Hamburg, Institute for Risk and Insurance.
  4. Urmann, Oliver, 2012. "Insurance in vertically differentiated repair markets," Economics Letters, Elsevier, vol. 116(1), pages 121-123.

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