IDEAS home Printed from https://ideas.repec.org/p/uwo/uwowop/9912.html
   My bibliography  Save this paper

Information and Dynamic Adjustment in Life Insurance Markets

Author

Listed:

Abstract

We analyze an overlapping generations model of voting over ``reform projects''. These resemble investments in that they first require some investment expenditure and later bring a payoff; consequently, older people are more conservative (against reforms) than younger ones. We show that if people vote about a constitution (which is a rule what majority is required in an election for a reform to take place), the constitution will require more than a simple majority. Moreover, from an intuitive social point of view, the equilibrium constitution is too conservative.

Suggested Citation

  • Matthias Messner & Mattias K. Polborn, 1999. "Information and Dynamic Adjustment in Life Insurance Markets," UWO Department of Economics Working Papers 9912, University of Western Ontario, Department of Economics.
  • Handle: RePEc:uwo:uwowop:9912
    as

    Download full text from publisher

    File URL: http://economics.uwo.ca/research/department_working_papers_docs/wp1999/wp9912.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Grossman, Gene M, 1983. "Union Wages, Temporary Layoffs, and Seniority," American Economic Review, American Economic Association, vol. 73(3), pages 277-290, June.
    2. Tullock, Gordon, 1998. "Reply to Guttman," European Journal of Political Economy, Elsevier, vol. 14(2), pages 215-218, May.
    3. Peter Kuhn & Jacques Robert, 1989. "Seniority and Distribution in a Two-Worker Trade Union," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 485-505.
    4. Roberts, Kevin, 2015. "Dynamic voting in clubs," Research in Economics, Elsevier, vol. 69(3), pages 320-335.
    5. Hoy, Michael, 1989. "The value of screening mechanisms under alternative insurance possibilities," Journal of Public Economics, Elsevier, vol. 39(2), pages 177-206, July.
    6. Crocker, Keith J & Snow, Arthur, 1986. "The Efficiency Effects of Categorical Discrimination in the Insurance Industry," Journal of Political Economy, University of Chicago Press, vol. 94(2), pages 321-344, April.
    7. Douglas H. Blair & David L. Crawford, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, Oxford University Press, vol. 99(3), pages 547-566.
    8. Tabarrok, Alexander, 1994. "Genetic testing: An economic and contractarian analysis," Journal of Health Economics, Elsevier, vol. 13(1), pages 75-91, March.
    9. Michael Hoy, 1984. "The Impact of Imperfectly Categorizing Risks on Income Inequality and Social Welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 17(3), pages 557-568, August.
    10. Kuhn, Peter, 1988. "A Nonuniform Pricing Model of Union Wages and Employment," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 473-508, June.
    11. Drazen, Allan & Gottfries, Nils, 1994. "Seniority Rules and the Persistence of Unemployment," Oxford Economic Papers, Oxford University Press, vol. 46(2), pages 228-244, April.
    12. Abel, Andrew B, 1986. "Capital Accumulation and Uncertain Lifetimes with Adverse Selection," Econometrica, Econometric Society, vol. 54(5), pages 1079-1097, September.
    13. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 629-649.
    14. Weiss, Yoram, 1985. "The Effect of Labor Unions on Investment in Training: A Dynamic Model," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 994-1007, October.
    15. Caplin, Andrew S & Nalebuff, Barry J, 1988. "On 64%-Majority Rule," Econometrica, Econometric Society, vol. 56(4), pages 787-814, July.
    16. James A. Ligon & Paul D. Thistle, 1996. "Consumer Risk Perceptions and Information in Insurance Markets with Adverse Selection," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 21(2), pages 191-210, December.
    17. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
    18. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-1155, December.
    19. Spence, Michael, 1978. "Product differentiation and performance in insurance markets," Journal of Public Economics, Elsevier, vol. 10(3), pages 427-447, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Constitution; conservatism; overlapping generations; political economy;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:uwo:uwowop:9912. 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: (). General contact details of provider: http://economics.uwo.ca/research/research_papers/department_working_papers.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.