Adverse selection, competition, and linear self-insurance
A two-class insurance model is analysed. In addition to a competitive insurance market, the households can use a simple linear self-insurance technology. Using the recently proposed Coalition Proof Equilibrium with Private Information due to Kahn and Mookherjee (1995) the insurance market equilibrium is found to be either separating or pooling. There may be profits in equilibrium. The self-insurance option can, but does not necessarily, promote more efficient allocation of consumption; self-insurance may be dysfunctional, lowering welfare. The model is applied to a competitive private pension market where the households in addition can save in a bequeathable asset.
Volume (Year): 12 (1999)
Issue (Month): 1 (Spring)
|Contact details of provider:|| Web page: http://www.taloustieteellinenyhdistys.fi|
More information through EDIRC
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.:
- Eckstein, Zvi & Eichenbaum, Martin & Peled, Dan, 1985. "Uncertain lifetimes and the welfare enhancing properties of annuity markets and social security," Journal of Public Economics, Elsevier, vol. 26(3), pages 303-326, April.
- Martin S. Eichenbaum & Dan S. Peled, 1986.
"Capital Accumulation and Annuities in an Adverse Selection Economy,"
NBER Working Papers
2046, National Bureau of Economic Research, Inc.
- Eichenbaum, Martin S & Peled, Dan, 1987. "Capital Accumulation and Annuities in an Adverse Selection Economy," Journal of Political Economy, University of Chicago Press, vol. 95(2), pages 334-54, April.
- Hellwig,Martin, 1986.
"Some recent developments in the theory of competition in markets with adverse selection,"
Discussion Paper Serie A
82, University of Bonn, Germany.
- Hellwig, Martin, 1987. "Some recent developments in the theory of competition in markets with adverse selection ," European Economic Review, Elsevier, vol. 31(1-2), pages 319-325.
- Kahn, C.M. & Mookherjee, D., 1991.
"Coalition Proof Equilibrium in an Advese Selection Insurance Economy,"
University of Chicago - Economics Research Center
91-5, Chicago - Economics Research Center.
- Kahn Charles M. & Mookherjee Dilip, 1995. "Coalition Proof Equilibrium in an Adverse Selection Insurance Economy," Journal of Economic Theory, Elsevier, vol. 66(1), pages 113-138, June.
- Engers, Maxim & Fernandez, Luis F, 1987. "Market Equilibrium with Hidden Knowledge and Self-selection," Econometrica, Econometric Society, vol. 55(2), pages 425-39, March.
- Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
- Picard Pierre, 1986.
"On the design of incentive schemes under moral hazard and adverse selection,"
CEPREMAP Working Papers (Couverture Orange)
- Picard, Pierre, 1987. "On the design of incentive schemes under moral hazard and adverse selection," Journal of Public Economics, Elsevier, vol. 33(3), pages 305-331, August.
- Arnott, Richard & Stiglitz, Joseph E, 1991. "Moral Hazard and Nonmarket Institutions: Dysfunctional Crowding Out or Peer Monitoring?," American Economic Review, American Economic Association, vol. 81(1), pages 179-90, March.
- Ehrlich, Isaac & Becker, Gary S, 1972. "Market Insurance, Self-Insurance, and Self-Protection," Journal of Political Economy, University of Chicago Press, vol. 80(4), pages 623-48, July-Aug..
When requesting a correction, please mention this item's handle: RePEc:fep:journl:v:12:y:1999:i:1:p:3-15. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Editorial Secretary)
If references are entirely missing, you can add them using this form.