Competition between insurers with superior information
We analyze markets where insurers are better informed about risk than consumers. We show that even competitive markets may result in insufficient information revelation and inefficient insurance coverage. This explains why certain risky consumers remain uninsured and why certain market segments are persistently profitable. We also show robustness to competition in menus or mechanisms. Our analysis of the “contrary of adverse selection” (competition between principals with common value and exclusivity) is suitable for other markets (lawyers, doctors, mechanics, etc.).
|Date of creation:||2005|
|Date of revision:|
|Publication status:||Published in European economic review, 2005, Vol. 49, no. 2. pp. 321-340.Length: 19 pages|
|Contact details of provider:|| Web page: http://www.dauphine.fr/en/welcome.html|
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.:
- Rothschild, Michael & Stiglitz, Joseph E, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, MIT Press, vol. 90(4), pages 630-49, November.
- Winand Emons, 1994.
"Credence Goods and Fraudulent Experts,"
dp9402, Universitaet Bern, Departement Volkswirtschaft.
- M.- C. Fagart, 1996.
"Compagnies d'assurance informées et équilibre sur le marché de l'assurance,"
THEMA Working Papers
96-26, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Fagart, M.C., 1996. "Companies d'assurance informees et equilibre sur le marche de l'assurance," Papers 9626, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Cho, In-Koo & Kreps, David M, 1987.
"Signaling Games and Stable Equilibria,"
The Quarterly Journal of Economics,
MIT Press, vol. 102(2), pages 179-221, May.
- Stiglitz, Joseph E, 1977. "Monopoly, Non-linear Pricing and Imperfect Information: The Insurance Market," Review of Economic Studies, Wiley Blackwell, vol. 44(3), pages 407-30, October.
- Kyle Bagwell & Garey Ramey, 1991.
"Oligopoly Limit Pricing,"
RAND Journal of Economics,
The RAND Corporation, vol. 22(2), pages 155-172, Summer.
- Hemenway, David, 1990. "Propitious Selection," The Quarterly Journal of Economics, MIT Press, vol. 105(4), pages 1063-69, November.
- Mark N. Hertzendorf & Per Baltzer Overgaard, 2001. "Price Competition and Advertising Signals: Signaling by Competing Senders," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 10(4), pages 621-662, December.
- Bertrand Villeneuve, 2000.
"The Consequences for a Monopolistic Insurance Firm of Evaluating Risk Better than Customers: The Adverse Selection Hypothesis Reversed,"
The Geneva Risk and Insurance Review,
Palgrave Macmillan, vol. 25(1), pages 65-79, June.
- Villeneuve, Bertrand, 2000. "The consequences for a monopolistic insurance firm of evaluating risk better than customers : The adverse selection hypothesis reversed," Economics Papers from University Paris Dauphine 123456789/5367, Paris Dauphine University.
When requesting a correction, please mention this item's handle: RePEc:dau:papers:123456789/5356. 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: (Alexandre Faure)
If references are entirely missing, you can add them using this form.