Asymmetric information in insurance: general testable implications

P-A Chiappori, BM Jullien, B Salanié, F Salanié

Research output: Contribution to journalArticle (Academic Journal)peer-review

114 Citations (Scopus)

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 correlation property 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.
Translated title of the contributionAsymmetric information in insurance: general testable implications
Original languageEnglish
Pages (from-to)783 - 798
Number of pages16
JournalRAND Journal of Economics
Volume37 (4)
Publication statusPublished - Dec 2006

Bibliographical note

Publisher: Allen Press

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