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Dealing with Moral Hazard and Adverse Selection Simultaneously


  • Dionne, G.
  • Lasserre, P.


Although Insurers Face Adverse Selection and Moral Hazard When They Set Insurance Contracts, These Two Types of Asymmetrical Information Have Been Given Separate Treatments Sofar in the Economic Literature. This Paper Is a First Attempt to Integrate Both Problems Into a Single Model. We Show How It Is Possible to Use Time in Order to Achieve a First-Best Allocation of Risks When Both Problems Are Present Simultaneously.

Suggested Citation

  • Dionne, G. & Lasserre, P., 1985. "Dealing with Moral Hazard and Adverse Selection Simultaneously," Cahiers de recherche 8559, Universite de Montreal, Departement de sciences economiques.
  • Handle: RePEc:mtl:montde:8559

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    References listed on IDEAS

    1. Spence, Michael, 1974. "Competitive and optimal responses to signals: An analysis of efficiency and distribution," Journal of Economic Theory, Elsevier, vol. 7(3), pages 296-332, March.
    2. Riley, John G., 1975. "Competitive signalling," Journal of Economic Theory, Elsevier, vol. 10(2), pages 174-186, April.
    3. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
    4. Spence, Michael, 1978. "Product differentiation and performance in insurance markets," Journal of Public Economics, Elsevier, vol. 10(3), pages 427-447, December.
    5. Quinzii, Martine & Rochet, Jean-Charles, 1985. "Multidimensional signalling," Journal of Mathematical Economics, Elsevier, vol. 14(3), pages 261-284, June.
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    Cited by:

    1. Dionne, Georges, 1998. "La mesure empirique des problèmes d’information," L'Actualité Economique, Société Canadienne de Science Economique, vol. 74(4), pages 585-606, décembre.
    2. Georges Dionne, 2012. "The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data," Cahiers de recherche 1233, CIRPEE.
    3. Georges Dionne & Nathalie Fombaron & Neil Doherty, 2012. "Adverse Selection in Insurance Contracting," Cahiers de recherche 1231, CIRPEE.

    More about this item


    Social Values ; Adverse Selection ; Insurance ; Risk;


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