Work

Asymmetric information in insurance: general testable implications

Year: 2006

Type: article

Abstract: Several recent articles on empirical contract theory and insurance have tested for a positive correlation between coverage and ex post risk, as predicted by standard models of pure adverse selection or pure moral hazard. We show here that the positive correlationproperty can be extended to general setups: competitive insurance markets and cases where risk aversion is public. We test our results on a French dataset. Our tests confirm that the estimated correlation is positive; they also suggest the presence of market power.

Source: The RAND Journal of Economics

DOI: 10.1111/j.1756-2171.2006.tb00057.x

Authors: Pierre-André Chiappori, Bruno Jullien, Bernard Salanié, François Salanié

Institutions: Columbia University, Centre National de la Recherche Scientifique, Toulouse School of Economics

Language: English

Topic: Insurance and Financial Risk Management

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

Funders: National Science Foundation, University of Chicago

Award: Empirical Applications of Contract Theory: the Case of Insurance Contracts