Revisiting early structural findings of asymmetric information’s non-existence in health insurance

Samuel Valdez

Economics Letters, 2021, vol. 207, issue C

Abstract: Cardon and Hendel (2001) presented the first structural model that studied adverse selection in the health insurance market—finding no evidence of informational asymmetries. More recent studies, however, have robustly demonstrated substantial evidence of adverse selection in health insurance markets. I demonstrate that once an error in the first-order condition of the maximization problem presented in Cardon and Hendel (2001) is corrected, while still not significant, the parameter capturing asymmetric information increases substantially.

Keywords: Asymmetric and private information; Insurance; Health insurance (search for similar items in EconPapers)
JEL-codes: D82 G22 I13 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:207:y:2021:i:c:s0165176521002937

DOI: 10.1016/j.econlet.2021.110016

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