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A note on health insurance under ex post moral hazard

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  • Pierre Picard

    (X - École polytechnique - IP Paris - Institut Polytechnique de Paris)

Abstract

In the linear coinsurance problem, examined Örst by Mossin (1968), a higher risk aversion with respect to wealth in the sense of ArrowPratt implies a higher optimal coinsurance rate. We show that this property does not hold for health insurance under ex post moral hazard, i.e., when illness severity cannot be observed by insurers and policyholders decide on their health expenditures. The optimal coinsurance rate trades o§ a risk sharing e§ect and an incentive e§ect, both related to risk aversion.

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  • Pierre Picard, 2016. "A note on health insurance under ex post moral hazard," Working Papers hal-01353597, HAL.
    • Handle: RePEc:hal:wpaper:hal-01353597
    Note: View the original document on HAL open archive server: https://polytechnique.hal.science/hal-01353597v2
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    References listed on IDEAS

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    1. Han Bleichrodt & Jose Luis Pinto, 2000. "A Parameter-Free Elicitation of the Probability Weighting Function in Medical Decision Analysis," Management Science, INFORMS, vol. 46(11), pages 1485-1496, November.
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    Cited by:

    1. Pierre Martinon & Pierre Picard & Anasuya Raj, 2018. "On the design of optimal health insurance contracts under ex post moral hazard," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 43(2), pages 137-185, September.

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    More about this item

    Keywords

    Health insurance; ex post moral hazard; coinsurance;
    All these keywords.

    JEL classification:

    • C - Mathematical and Quantitative Methods
    • G0 - Financial Economics - - General
    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services
    • G3 - Financial Economics - - Corporate Finance and Governance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting
    • K2 - Law and Economics - - Regulation and Business Law

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