Competitive Failures in Insurance Markets: Theory And Policy Implications (Cesifo Seminar) - Hardcover
Synopsis
Leading international economists offer new insights on recent developments in the economic analysis of the limits of insurability, with particular attention of adverse selection and moral hazard.
Risk sharing is a cornerstone of modern economies. It is valuable to risk-averse consumers and essential for investment and entrepreneurs. The standard economic model of risk exchange predicts that competition in insurance markets will result in all individual risks being insured--that all diversifiable risks in the economy will be covered through mutual risk-sharing arrangements--but in practice this is not the case. Many diversifiable risks are still borne by individuals; many environmental, catastrophic, and technological risks are not covered by insurance contracts. In this CESifo volume, leading international economists provide new insights on recent developments in the economic analysis of the limits of insurability. They find that asymmetric information is a central reason why competition in insurance markets may fail to guarantee that mutually advantageous risk exchanges are realized in today's economies. In particular, adverse selection and moral hazard help explain why competitive insurance markets fail to provide an efficient level of insurance and hence why public intervention is required to solve the problem. The contributors offer theoretical models of insurance markets involving adverse selection as well as empirical analyses of health insurance and non-health insurance markets in countries including Australia, Sweden, Switzerland, and the United States.
Contributors: Luis H. B. Braido, Mark J. Browne, Pierre-André Chiappori, Georges Dionne, Irena Dushi, Roland Eisen, Lucien Gardiol, Pierre-Yves Geoffard, Christian Gouriéroux, Chantal Grandchamp, Erik Grönqvist, Luigi Guiso, Paul Kofman, Hansjörg Lehmann, Gregory P. Nini
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About the Author
Pierre-André Chiappori is Professor of Economics at Columbia University.
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CESifo Seminar Series: Competitive Failures in Insurance Markets: Theory and Policy Implications
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Hardcover. Condition: Fair. Beschriftungen / Markierungen; Leichte Risse. Leading international economists provide insights into the economic analysis of insurability limits, focusing on adverse selection and moral hazard. Risk sharing is crucial for risk-averse consumers and essential for investment and entrepreneurship. While the standard economic model suggests that competition in insurance markets should ensure all individual risks are insured, many diversifiable risks remain unprotected, including environmental, catastrophic, and technological risks. This volume explores why competitive insurance markets often fail to deliver efficient insurance levels, attributing this to asymmetric information. Adverse selection and moral hazard are key factors explaining these market failures and the necessity for public intervention. The contributors present theoretical models and empirical analyses of insurance markets, including health and non-health insurance, across various countries such as Australia, Sweden, Switzerland, and the United States. The work highlights the complexities of risk exchange in modern economies and the challenges faced in achieving effective risk-sharing arrangements. Seller Inventory # 96c6f749-3167-418b-bd26-5794f3cfa830
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Competitive Failures in Insurance Markets: Theory and Policy Implications
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MIT Press Ltd, London, United Kingdom, 2006
ISBN 10: 0262033526
ISBN 13: 9780262033527
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