IDEAS home Printed from https://ideas.repec.org/a/vep/journl/y2004v112i1p27-46.html
   My bibliography  Save this article

Does Asymmetric Information matter in Competitive Insurance Markets?

Author

Listed:
  • Federico Etro

    (Dipartimento di Economia, LUISS University, Rome)

Abstract

Does asymmetric information matter in insurance markets? Recent evidence on the automobile insurance market suggests not, rejecting the separating equilibnum of the Rothschild-Stiglitz model. However, I show that a two-penod version of that model can sustain a pooling equilibrium with experience rating which is consistent with the evidence and it mimics the bonus-malus policies of the automobile insurance markets. I also simulate the model showing that under reasonable conditions coordination failures emerge due to multiple equilibria.

Suggested Citation

  • Federico Etro, 2004. "Does Asymmetric Information matter in Competitive Insurance Markets?," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 112(1), pages 27-46.
  • Handle: RePEc:vep:journl:y:2004:v:112:i:1:p:27-46
    as

    Download full text from publisher

    File URL: http://riss.vitaepensiero.it/scheda-articolo_digital/federico-etro/does-asymmetric-information-matter-in-competitive-insurance-markets-000518_2004_0001_0028-150781.html
    Download Restriction: Yes

    More about this item

    Keywords

    asymmetric infomation; adverse selection; insurance;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:vep:journl:y:2004:v:112:i:1:p:27-46. 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: (Vep - Vita e Pensiero). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.