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Role of Panel Analysis in Identifying Asymmetric Information with Optional Unit Provision in Federal Crop Insurance


  • Shaik, Saleem


This paper has a two-fold contribution, first we demonstrate the relationship of spatial, temporal and residual yield risk estimated from a two-way panel random effects model to asymmetric information with an optional unit provision in the federal crop insurance program. Second, the yield risk components are incorporated in a discrete choice model to examine the presence of asymmetric information due to potential yield switching with optional unit provisions. Empirical application to 1998 U.S. cotton crop insurance data reveals the presence of asymmetric information with optional unit provisions.

Suggested Citation

  • Shaik, Saleem, 2009. "Role of Panel Analysis in Identifying Asymmetric Information with Optional Unit Provision in Federal Crop Insurance," Agribusiness & Applied Economics Report 54983, North Dakota State University, Department of Agribusiness and Applied Economics.
  • Handle: RePEc:ags:nddaae:54983

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    Adverse Selection; Moral Hazard; Optional Unit Policy; Crop Insurance; U.S. Cotton; Crop Production/Industries; Demand and Price Analysis; D82; G22; Q10;

    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
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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