Self-protection and insurance with interdependencies
We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling 'at-fault' insurance can partially internalize this externality and thereby improve individual and social welfare.
|Date of creation:||2007|
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- Ian Ayres & Steven D. Levitt, 1998. "Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of Lojack," The Quarterly Journal of Economics, Oxford University Press, vol. 113(1), pages 43-77.
- von Ungern-Sternberg, Thomas, 1996.
"The limits of competition: Housing insurance in Switzerland,"
European Economic Review,
Elsevier, vol. 40(3-5), pages 1111-1121, April.
- Thomas VON UNGERN-STERNBERG, 1995. "The Limits of Competition : Housing Insurance in Switzerland," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 9511, Université de Lausanne, Faculté des HEC, DEEP.
- Harry W. Richardson & Peter Gordon & James E. Moore II (ed.), 2005. "The Economic Impacts of Terrorist Attacks," Books, Edward Elgar Publishing, number 3783.
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