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Welfare-Improving Asymmetric Information in a Dynamic Insurance Market

Author

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  • de Garidel, T.

Abstract

We provide a two-period model of competition in insurance market under incomplete information. Each agent, together with his initial insurer, learns about his type through accidents, but other insurers may not, depending on informational structures. We show that (i) keeping information about accidents claims private is welfare-improving, (ii) such a policy does not jeopardize the existence of an equilibrium, despite adverse selection arises endogenously, and (iii) this equilibrium exhibits both bonus and malus.

Suggested Citation

  • de Garidel, T., 1997. "Welfare-Improving Asymmetric Information in a Dynamic Insurance Market," Papers 32, Laval - Laboratoire Econometrie.
  • Handle: RePEc:fth:lavale:32
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    Cited by:

    1. Dionne, G. & Doherty, N., 1991. "Adverse Selection In Insurance Markets: A Selective Survey," Cahiers de recherche 9105, Centre interuniversitaire de recherche en ├ęconomie quantitative, CIREQ.

    More about this item

    Keywords

    COMPETITION ; SOCIAL WELFARE ; INSURANCE ; ADVERSE SELECTION;

    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

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