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Functional Form Problems in Modeling Insurance and Gambling


  • W. Erwin Diewert

    (Department of Economics, University of British Columbia, #997-1873 East Mall, V6T 1Z1 Vancouver, BC, Canada)


Defining the outputs of the property insurance and gambling sectors of an economy has proved to be a difficult problem for national income accountants. It is well known that the traditional expected-utility model is not consistent with economic agents fully insuring their property. Thus the present paper adapts existing non-expected-utility theories to yield useful measures of output for the property insurance and gambling sectors. The Geneva Papers on Risk and Insurance Theory (1995) 20, 135–150. doi:10.1007/BF01098962

Suggested Citation

  • W. Erwin Diewert, 1995. "Functional Form Problems in Modeling Insurance and Gambling," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 20(1), pages 135-150, June.
  • Handle: RePEc:pal:genrir:v:20:y:1995:i:1:p:135-150

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    References listed on IDEAS

    1. Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 399-415.
    2. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    3. Reinganum, Jennifer F. & Wilde, Louis L., 1985. "Income tax compliance in a principal-agent framework," Journal of Public Economics, Elsevier, vol. 26(1), pages 1-18, February.
    4. 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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    Cited by:

    1. Kam Yu, 2009. "Measuring the Output and Prices of the Lottery Sector: An Application of Implicit Expected Utility Theory," NBER Chapters,in: Price Index Concepts and Measurement, pages 405-425 National Bureau of Economic Research, Inc.
    2. J. David Cummins & Mary A. Weiss, 1998. "Analyzing Firm Performance in the Insurance Industry Using Frontier Efficiency Methods," Center for Financial Institutions Working Papers 98-22, Wharton School Center for Financial Institutions, University of Pennsylvania.
    3. Cummins, J. David & Rubio-Misas, Maria & Zi, Hongmin, 2004. "The effect of organizational structure on efficiency: Evidence from the Spanish insurance industry," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 3113-3150, December.
    4. W. Erwin Diewert, 1995. "Price and Volume Measures in the System of National Accounts," NBER Working Papers 5103, National Bureau of Economic Research, Inc.
    5. William A. Barnett & Jane Binner & W. Erwin Diewert, 2005. "Functional Structure and Approximation in Econometrics (book front matter)," Econometrics 0511006, EconWPA.
    6. Erwin Diewert, 2005. "Progress in Service Sector Productivity Measurement: Review Article on "Productivity in the U.S. Services Sector: New Sources of Economic Growth"," International Productivity Monitor, Centre for the Study of Living Standards, vol. 11, pages 57-69, Fall.

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