Genetic Information: Comparing Alternative Regulatory Approaches when Prevention Matters

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Genetic Information: Comparing Alternative Regulatory Approaches when Prevention Matters

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Francesca Barigozzi ()
Dominique Henriet ()

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Abstract

We compare the alternative approaches for regulating genetic information in the health insurance market when prevention measures are available. In the model, firms offer insurance contracts to consumers who are initially uninformed of their risk type but can obtain such information by performing a costless genetic test. A crucial ingredient of our analysis is that information has decision-making value since it allows for optimal choice of a self-insurance action (secondary prevention). We focus on the welfare properties of market equilibria obtained under the different regulatory schemes and, by using an intuitive graphical analysis, we rank them unambiguously. Our results show that Disclosure Duty weakly dominates the other regulatory schemes and that Strict Prohibition represents the worst regulatory approach.

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Publisher Info
Paper provided by CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY in its series CHILD Working Papers with number wp01_09.

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Length: 31 pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:wpc:wplist:wp01_09

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Paper
- F. Barigozzi & D. Henriet, 2009. "Genetic Information: Comparing Alternative Regulatory Approaches when Prevention Matters," Working Papers 657, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]

Find related papers by JEL classification:
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies
L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

This paper has been announced in the following NEP Reports:

NEP-ALL-2009-04-13 (All new papers)
NEP-CTA-2009-04-13 (Contract Theory & Applications)
NEP-HEA-2009-04-13 (Health Economics)
NEP-IAS-2009-04-13 (Insurance Economics)
NEP-REG-2009-04-13 (Regulation)

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December. [Downloadable!] (restricted)
Hoel, Michael & Iversen, Tor & Nilssen, Tore & Vislie, Jon, 2006. "Genetic testing in competitive insurance markets with repulsion from chance: A welfare analysis," Journal of Health Economics, Elsevier, vol. 25(5), pages 847-860, September. [Downloadable!] (restricted)
Posner, Richard A, 1981. "The Economics of Privacy," American Economic Review, American Economic Association, vol. 71(2), pages 405-09, May. [Downloadable!] (restricted)
Strohmenger, R. & Wambach, A., 2000. "Adverse selection and categorical discrimination in the health insurance markets: the effects of genetic tests," Journal of Health Economics, Elsevier, vol. 19(2), pages 197-218, March. [Downloadable!] (restricted)
George J. Stigler, 1980. "An Introduction to Privacy in Economics and Politics," University of Chicago - George G. Stigler Center for Study of Economy and State 10, Chicago - Center for Study of Economy and State.
Hoy, Michael & Polborn, Mattias, 2000. "The value of genetic information in the life insurance market," Journal of Public Economics, Elsevier, vol. 78(3), pages 235-252, November. [Downloadable!] (restricted)
Other versions:
- Hoy, Michael & Polborn, Mattias, 1998. "The Value of Genetic Information in the Life Insurance Market," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
Crocker, Keith J. & Snow, Arthur, 1992. "The social value of hidden information in adverse selection economies," Journal of Public Economics, Elsevier, vol. 48(3), pages 317-347, August. [Downloadable!] (restricted)
Cochrane, John H, 1995. "Time-Consistent Health Insurance," Journal of Political Economy, University of Chicago Press, vol. 103(3), pages 445-73, June. [Downloadable!] (restricted)
Doherty, Neil A. & Thistle, Paul D., 1996. "Adverse selection with endogenous information in insurance markets," Journal of Public Economics, Elsevier, vol. 63(1), pages 83-102, December. [Downloadable!] (restricted)
Krupa S. Viswanathan & Jean Lemaire & Kate Withers & Katrina Armstrong & Agnieszka Baumritter & John C. Hershey & Mark V. Pauly & David A. Asch, 2007. "Adverse Selection in Term Life Insurance Purchasing due to the BRCA1/2 Genetic Test and Elastic Demand," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 74(1), pages 65-86. [Downloadable!] (restricted)
Tabarrok, Alexander, 1994. "Genetic testing: An economic and contractarian analysis," Journal of Health Economics, Elsevier, vol. 13(1), pages 75-91, March. [Downloadable!] (restricted)
Cremer, Jacques & Khalil, Fahad, 1992. "Gathering Information before Signing a Contract," American Economic Review, American Economic Association, vol. 82(3), pages 566-78, June. [Downloadable!] (restricted)
Other versions:
- CRÉMER, Jacques & KHALIL, Fahad, 1991. "Gathering Information before Signing a Contract," IDEI Working Papers 5, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
- Cremer, J. & Khalil, F., 1991. "Gathering Information Before Signing a Contract," Working Papers 91-16, University of Washington, Department of Economics.
- Cremer, J. & Khalil, F., 1991. "Gathering Information Before Signing a Contract," Discussion Papers in Economics at the University of Washington 91-16, Department of Economics at the University of Washington.
Hoel, Michael & Iversen, Tor, 2002. "Genetic testing when there is a mix of compulsory and voluntary health insurance," Journal of Health Economics, Elsevier, vol. 21(2), pages 253-270, March. [Downloadable!] (restricted)
Other versions:
- Michael Hoel & Tor Iversen, 2001. "Genetic Testing When There is a Mix of Compulsory and Voluntary Health Insurance," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]

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This page was last updated on 2009-11-1.

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