Author: Stanford University. Institute for Mathematical Studies in the Social SciencesPublisher:
ISBN:
Category :
Languages : en
Pages : 62
Book Description
Equilibrium in Competitive Insurance Markets: an Essay on the Economics of Imperfect Information
Author: Stanford University. Institute for Mathematical Studies in the Social SciencesPublisher:
ISBN:
Category :
Languages : en
Pages : 62
Book Description
Foundations of Insurance Economics
Author: Georges DionnePublisher: Springer Science & Business Media
ISBN: 0792392043
Category : Business & Economics
Languages : en
Pages : 748
Book Description
Economic and financial research on insurance markets has undergone dramatic growth since its infancy in the early 1960s. Our main objective in compiling this volume was to achieve a wider dissemination of key papers in this literature. Their significance is highlighted in the introduction, which surveys major areas in insurance economics. While it was not possible to provide comprehensive coverage of insurance economics in this book, these readings provide an essential foundation to those who desire to conduct research and teach in the field. In particular, we hope that this compilation and our introduction will be useful to graduate students and to researchers in economics, finance, and insurance. Our criteria for selecting articles included significance, representativeness, pedagogical value, and our desire to include theoretical and empirical work. While the focus of the applied papers is on property-liability insurance, they illustrate issues, concepts, and methods that are applicable in many areas of insurance. The S. S. Huebner Foundation for Insurance Education at the University of Pennsylvania's Wharton School made this book possible by financing publication costs. We are grateful for this assistance and to J. David Cummins, Executive Director of the Foundation, for his efforts and helpful advice on the contents. We also wish to thank all of the authors and editors who provided permission to reprint articles and our respective institutions for technical and financial support.
Imperfect Insurance Markets
Author: Annette HofmannPublisher: VVW GmbH
ISBN: 3862981134
Category : Business & Economics
Languages : en
Pages : 191
Book Description
The focus of this thesis is on consumer diversity. Incorporating consumer heterogeneity into economic analysis is well-established in industrial organization literature; this aspect is, however, often neglected in microeconomic insurance models. A first new approach lies in analyzing risk interdependencies. When risks are interdependent, an agent's decision to self-protect affects the loss probabilities faced by others. Due to these externalities, economic agents invest too little in prevention relative to the socially efficient level by ignoring marginal external costs or benefits conferred on others. We analyze an insurance market with externalities of loss prevention. It is shown in a model with heterogenous agents and imperfect information that a monopolistic insurer can achieve the social optimum by engaging in premium discrimination. An insurance monopoly reduces not only costs of risk selection, but may also play an important social role in loss prevention. This result can be empirically confirmed. We also deal with the impact of intermediation on insurance market transparency and performance. In a differentiated insurance market under imperfect information, uninformed consumers may become informed about product suitability by consulting an intermediary. We analyze current broker compensation systems: commissions and fees. While insurers' equilibrium profits are equivalent under both systems, social welfare under fees is first-best efficient. Both systems may offer the opportunity to increase profits via collusion. Under a commission system, collusion enables insurers to separate consumers into groups purchasing different contracts. Insurers may then extract additional rents from some consumers. This might explain why intermediaries tend to be compensated by insurers in practice. Finally, we study optimal monopoly pricing given imperfect information and heterogenous policyholders. Die in englischer Sprache verfasste Arbeit ist der mikroökonomischen Analyse von Versicherungsmärkten gewidmet. Zunächst werden einige wichtige theoretische Grundlagen der Versicherungsnachfragetheorie beschrieben. Eine zentrale Erweiterung des Basismodells stellen interdependente Risiken dar. Bestehen Risikointerdependenzen, so sind alle Maßnahmen, die die Schadenshäufigkeit reduzieren, mit positiven externen Effekten verbunden. Es wird gezeigt, dass im Gleichgewicht das realisierte Präventionsniveau unterhalb des optimalen Niveaus angesiedelt ist. Aufgrund der Externalitäten kommt es zu einem Marktversagen und nur ein Monopolversicherer kann eine differenzierte Prämienstruktur herbeiführen, die zum optimalen Präventionsniveau führt. Dieses Ergebnis kollidiert mit dem Ergebnis, dass wettbewerbliche Versicherungsmärkte zu einer höheren Gesamtwohlfahrt führen, es lässt sich jedoch empirisch stützen. Ein weiterer Schwerpunkt der Arbeit liegt auf unvollkommenen Versicherungsmärkten, wobei heterogene Versicherungsnachfrager mit unterschiedlichen Produktpräferenzen und Informationskosten unterstellt werden. In einem solchen Markt erhöhen Versicherungsvermittler die Markttransparenz und damit auch die Gewinne der Versicherer. Im Mittelpunkt steht die Analyse verschiedener Vergütungsformen der Vermittler. Ein Vergütungssystem auf Basis von Beratungshonoraren ist einem Provisionssystem aus wohlfahrtsökonomischer Perspektive vorzuziehen. Aus Sicht der Versicherer kehrt sich dieses Ergebnis allerdings um, sobald es zur Kollusion zwischen Versicherern und Vermittlern kommt. Der letzte Schwerpunkt liegt in der Analyse einer optimalen Preispolitik eines Versicherungsmonopolisten bei heterogenen Nachfragern, die sich durch ihre Risikopräferenzen und damit ihre individuelle Zahlungsbereitschaft für Versicherungen unterscheiden.
Equilibrium in Competitive Insurance Markets : the Welfare Economics of Moral Hazard. II. Existence and Nature of Equilibrium
Author: Arnott, Richard JPublisher: Kingston, Ont. : Institute for Economic Research, Queen's University
ISBN:
Category :
Languages : en
Pages : 43
Book Description
Equilibrium in Competitive Insurance Markets
Author: Richard ArnottPublisher:
ISBN:
Category : Competition
Languages : en
Pages : 43
Book Description
Competitive Insurance Markets Under Adverse Selection and Capacity Constraints
Author: Roman InderstPublisher:
ISBN:
Category : Competition
Languages : en
Pages : 36
Book Description
The Microeconomics of Insurance
Author: Ray ReesPublisher: Now Publishers Inc
ISBN: 1601981082
Category : Business & Economics
Languages : en
Pages : 178
Book Description
In this relatively short survey, we present the core elements of the microeconomic analysis of insurance markets at a level suitable for senior undergraduate and graduate economics students. The aim of this analysis is to understand how insurance markets work, what their fundamental economic functions are, and how efficiently they may be expected to carry these out.
Equilibrium in a Competitive Insurance Market Under Adverse Selection with Endogenous Information
Author: Joseph E. StiglitzPublisher:
ISBN:
Category : Adverse selection (Insurance)
Languages : en
Pages : 67
Book Description
This paper investigates the existence and nature of equilibrium in a competitive insurance market under adverse selection with endogenously determined information structures. Rothschild-Stiglitz (RS) characterized the self-selection equilibrium under the assumption of exclusivity, enforcement of which required full information about contracts purchased. By contrast, the Akerlof price equilibrium described a situation where the insurance firm has no information about sales to a particular individual. We show that with more plausible information assumptions -- no insurance firm has full information but at least knows how much he has sold to any particular individual -- neither the RS quantity constrained equilibrium nor the Akerlof price equilibrium are sustainable. But when the information structure itself is endogenous -- firms and consumers decide what information about insurance purchases to reveal to whom -- there always exists a Nash equilibrium. Strategies for firms consist of insurance contracts to offer and information-revelation strategies; for customers -- buying as well as information revelation strategies. The equilibrium set of insurance contracts is unique: the low risk individual obtains insurance corresponding to the pooling contract most preferred by him; the high risk individual, that plus (undisclosed) supplemental insurance at his own actuarial odds resulting in his being fully insured. Equilibrium information revelation strategies of firms entail some but not complete information sharing. However, in equilibrium all individuals are induced to tell the truth. The paper shows how the analysis extends to cases where there are more than two groups of individuals and where firms can offer multiple insurance contracts.
Competitive Insurance Markets Ii
Author: Peter S. FaynzilbergPublisher:
ISBN:
Category :
Languages : en
Pages : 34
Book Description
Under the conditions conjectured by Rothschild and Stiglitz (1976) as leading to extreme market failure, we show the existence of a unique incentive-efficient equilibrium. In terms of its sensitivity to the structure of the buyer population, this equilibrium may be flexible or rigid. Closed-form illustrations of equilibria and the solution methodology, which is based on the characterization of Nash equilibrium in terms of selective efficiency (Faynzilberg, 2003), are also provided.
Author: Wanda Mimra