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Information and Opportunistic Behavior in Federal Crop Insurance Programs

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Author Info
Cory G. Walters
C. Richard Shumway
Hayley H. Chouinard
Philip R. Wandschneider () (School of Economic Sciences, Washington State University)
Abstract

Opportunistic behavior in crop insurance can arise due to asymmetric information between producers and the Federal Crop Insurance Corporation. Producers who insure fields using transitional yields based on county average yields or who select options such as buy-up coverage or revenue insurance may increase their return from crop insurance. Using field-level crop insurance contract data for several crops in five growing regions, we find evidence that producers can profit from using buy-up coverage, revenue insurance, and transitional yields and that the level of producer opportunism is crop but not necessarily land-quality specific and is greater due to premium subsidization.

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File URL: http://www.ses.wsu.edu/PDFFiles/WorkingPapers/Shumway/CropInsurance_1-23-08_.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2008-9.

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Length: 34 pages
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:wsu:wpaper:shumway-7

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Related research
Keywords: opportunistic behavior; crop insurance; buy-up; revenue; transitional yields;

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Find related papers by JEL classification:
Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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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.:
  1. Quiggin, J. & Karagiannis, G. & Stanton, J., 1993. "Crop Insurance And Crop Production: An Empirical Study Of Moral Hazard And Adverse Selection," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 37(02), August. [Downloadable!]
  2. Makki, Shiva S. & Somwaru, Agapi, 2001. "Asymmetric Information in the Market for Yield and Revenue Insurance Products," Technical Bulletins 33587, United States Department of Agriculture, Economic Research Service. [Downloadable!]
  3. Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
  4. Edwards, William M., 2003. "Actual Production History and Insurance Units for Multiple Peril Crop Insurance," Staff General Research Papers 10267, Iowa State University, Department of Economics. [Downloadable!]
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