Assessing Adverse Selection in Crop Insurance Markets: An Application of Parametric and Nonparametric Methods
This paper investigates adverse selection in crop insurance markets using both parametric and nonparametric methods. Our results reject the conditional independence of the choice of insurance contracts and risk of loss, implying the presence of informational asymmetries between insurers and insureds in the markets. Results also show that actual premium rates are significantly different from both pure and fair premium rates. Our findings provide useful insights into asymmetric information problems and methods to assess the risk of loss in crop insurance markets.
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Volume (Year): 2 (2007)
Issue (Month): 1 (May)
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- Barry K. Goodwin, 1995. "The Economics of Crop Insurance and Disaster Aid," Books, American Enterprise Institute, number 53374, Winter.
- Harwood, Joy L. & Heifner, Richard G. & Coble, Keith H. & Perry, Janet E. & Somwaru, Agapi, 1999. "Managing Risk in Farming: Concepts, Research, and Analysis," Agricultural Economics Reports 34081, United States Department of Agriculture, Economic Research Service.
- Quiggin, John C. & Karagiannis, Giannis & 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.
- John C. Quiggin & Giannis Karagiannis & J. Stanton, 1993. "Crop Insurance And Crop Production: An Empirical Study Of Moral Hazard And Adverse Selection," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 37(2), pages 95-113, 08.
- Richard E. Just & Quinn Weninger, 1999. "Are Crop Yields Normally Distributed?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(2), pages 287-304.
- Weninger, Quinn & Just, Richard E., 1999. "Are Crop Yields Normally Distributed?," Staff General Research Papers Archive 5064, Iowa State University, Department of Economics.
- Georges Dionne & Christian Gourieroux & Charles Vanasse, 2001. "Testing for Evidence of Adverse Selection in the Automobile Insurance Market: A Comment," Journal of Political Economy, University of Chicago Press, vol. 109(2), pages 444-473, April.
- Charles B. Moss & J. S. Shonkwiler, 1993. "Estimating Yield Distributions with a Stochastic Trend and Nonnormal Errors," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(4), pages 1056-1062.
- Keith H. Coble & Thomas O. Knight & Rulon D. Pope & Jeffery R. Williams, 1997. "An Expected-Indemnity Approach to the Measurement of Moral Hazard in Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(1), pages 216-226.
- Babcock, Bruce A. & Hennessy, David A., 1996. "Input Demand under Yield and Revenue Insurance," ISU General Staff Papers 199601010800001155, Iowa State University, Department of Economics.
- Barry K. Goodwin, 1993. "An Empirical Analysis of the Demand for Multiple Peril Crop Insurance," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 425-434. Full references (including those not matched with items on IDEAS)
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