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Designing Crop Insurance to Manage Moral Hazard Costs

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  • Weaver, Robert D.
  • Kim, Taeho

Abstract

A new crop insurance model based on just random risk (natural states) is presented instead of traditional model based on random risk, guaranteed price, and guaranteed yield. The simulation approach shows how the incentive compatibility constraints resolve the moral hazard problem by the insured under the insurer-agency crop insurance contracting.

Suggested Citation

  • Weaver, Robert D. & Kim, Taeho, 2002. "Designing Crop Insurance to Manage Moral Hazard Costs," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24784, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae02:24784
    DOI: 10.22004/ag.econ.24784
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    References listed on IDEAS

    as
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    4. Darrough, Masako N & Stoughton, Neal M, 1986. "Moral Hazard and Adverse Selection: The Question of Financial Structure," Journal of Finance, American Finance Association, vol. 41(2), pages 501-513, June.
    5. Ramaswami, Bharat & Roe, Terry L., 2001. "Structural Models Of Area Yield Crop Insurance," 2001 Annual meeting, August 5-8, Chicago, IL 20638, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    Full references (including those not matched with items on IDEAS)

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    Keywords

    Risk and Uncertainty;

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