Optimal risk-sharing under adverse selection and imperfect risk perception
نویسندگان
چکیده
منابع مشابه
Optimal Risk-sharing under Adverse Selection and Imperfect Risk Perception∗
The present paper thoroughly explores second-best efficient allocations in an insurance economy with adverse selection. We start with a natural extension of the classical model, assuming less than perfect risk perception. We characterize the constraints on efficient redistribution, and we summarize the incidence of incentive constraints on the economy with the notions of weak and strong adverse...
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Does adverse selection hamper the effectiveness of voluntary risk sharing? How do differences in risk profiles affect adverse selection? We experimentally investigate individuals’ willingness to share risks with others. Across treatments we vary how risk profiles differ between individuals. We find strong evidence for adverse selection if individuals risk profiles can be ranked according to fir...
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Paying insurers risk-adjusted prices for covering different individuals can correct selection incentives and induce the market to provide optimal insurance policies. To calculate the optimal risk-adjusted prices we need to know (a) what the optimal policies are; (b) how much they cost; and (c) how competitive the market is. We examine these issues in a model with spatial heterogeneity and adver...
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ژورنال
عنوان ژورنال: Canadian Journal of Economics/Revue canadienne d'<html_ent glyph="@eacute;" ascii="e"/>conomique
سال: 2005
ISSN: 0008-4085,1540-5982
DOI: 10.1111/j.0008-4085.2005.00311.x