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A Note on Bonus Scales


  • João Manuel Andrade e Silva
  • Maria de Lourdes Centeno


We revisit the optimal bonus scales introduced by Norberg (Norberg, R., 1976, "Scandinavian Actuarial Journal" (2): 92-107), Borgan, Hoem, and Norberg (Borgan, O., J. Hoem, and R. Norberg, 1981, "Scandinavian Actuarial Journal" (2): 165-178), and Gilde and Sundt (Gilde, V., and B. Sundt, 1989, "Scandinavian Actuarial Journal" (1): 13-22) and underline some potential problems of the linear scales. As a possible solution we propose the use of geometric scales. Copyright The Journal of Risk and Insurance.

Suggested Citation

  • João Manuel Andrade e Silva & Maria de Lourdes Centeno, 2005. "A Note on Bonus Scales," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 72(4), pages 601-607.
  • Handle: RePEc:bla:jrinsu:v:72:y:2005:i:4:p:601-607

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    References listed on IDEAS

    1. Bond, Eric W. & Crocker, Keith J., 1997. "Hardball and the soft touch: The economics of optimal insurance contracts with costly state verification and endogenous monitoring costs," Journal of Public Economics, Elsevier, vol. 63(2), pages 239-264, January.
    2. Tennyson, Sharon, 1997. "Economic institutions and individual ethics: A study of consumer attitudes toward insurance fraud," Journal of Economic Behavior & Organization, Elsevier, vol. 32(2), pages 247-265, February.
    3. Keith J. Crocker & John Morgan, 1998. "Is Honesty the Best Policy? Curtailing Insurance Fraud through Optimal Incentive Contracts," Journal of Political Economy, University of Chicago Press, vol. 106(2), pages 355-375, April.
    4. Pierre Picard, 2012. "Economic Analysis of Insurance Fraud," Working Papers hal-00725561, HAL.
    5. Crocker, Keith J & Tennyson, Sharon, 2002. "Insurance Fraud and Optimal Claims Settlement Strategies," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 469-507, October.
    6. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
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