Optimal Insurance Under Random Auditing
We provide a characterization of an optimal insurance contract (coverage schedule and audit policy) when the monitoring procedure is random. When the policyholder exhibits constant absolute risk aversion, the optimal contract involves a positive indemnity payment with a deductible when the magnitude of damages exceeds a threshold.
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|Date of creation:||1998|
|Date of revision:|
|Contact details of provider:|| Postal: THEMA, Universite de Paris X-Nanterre, U.F.R. de science economiques, gestion, mathematiques et informatique, 200, avenue de la Republique 92001 Nanterre CEDEX.|
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- Bond, E.W. & Crocker, K.J., 1993.
"Hardball and the Soft Touch: The Economics of Optimal Insurance Contracts with Costly State Verification and Endogenous Monitoring Costs,"
10-93-1b, Pennsylvania State - Department of Economics.
- Bond, Eric W. & Crocker, Keith J., 1997. "Hardball and the soft touch: The economics of optimal insurance contracts with costly state verification and endogenous monitoring costs," Journal of Public Economics, Elsevier, vol. 63(2), pages 239-264, January.
- Marie-CÃ©cile Fagart & Pierre Picard, 1999.
"Optimal Insurance Under Random Auditing,"
The Geneva Risk and Insurance Review,
Palgrave Macmillan, vol. 24(1), pages 29-54, June.
- M-C. Fagart & P. Picard, 1998. "Optimal insurance under random auditing," THEMA Working Papers 98-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Fagart, M.-C. & Picard, P., 1998. "Optimal Insurance Under Random Auditing," Papers 9808, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- Marie-Cécile Fagart & Pierre Picard, 1998. "Optimal Insurance Under Random Auditing," Working Papers 98-47, Centre de Recherche en Economie et Statistique.
- Kim C. Border & Joel Sobel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Oxford University Press, vol. 54(4), pages 525-540.
- Townsend, Robert M., 1979.
"Optimal contracts and competitive markets with costly state verification,"
Journal of Economic Theory,
Elsevier, vol. 21(2), pages 265-293, October.
- Robert M. Townsend, 1979. "Optimal contracts and competitive markets with costly state verification," Staff Report 45, Federal Reserve Bank of Minneapolis.
- Picard, Pierre, 1996.
"On the design of optimal insurance policies under manipulation of audit cost,"
CEPREMAP Working Papers (Couverture Orange)
- Picard, Pierre, 2000. "On the Design of Optimal Insurance Policies under Manipulation of Audit Cost," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(4), pages 1049-71, November.
- Picard, P., 1996. "On the design of Optimal Insurance Policies Under Manipulation of Audit Cost," Papers 9620, Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor..
- P. Picard, 1996. "On the Design of Optimal Insurance Policies under Manipulation of Audit Cost," THEMA Working Papers 96-20, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
- Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, Oxford University Press, vol. 104(2), pages 399-415.
- Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December.
- David P. Baron & David Besanko, 1984. "Regulation, Asymmetric Information, and Auditing," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 447-470, Winter.
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