Evaluating the effects of asymmetric information in a model of crop insurance

Adeyemi Esuola, Michael Hoy (), Zahirul Islam and Calum G. Turvey

Agricultural Finance Review, 2007, vol. 67, issue 2, pages 341-356

Abstract: Asymmetric information in the form of moral hazard and adverse selection can result in sizable program costs for government-provided crop insurance plans. We present a methodology and illustrative simulations to show how these two types of information problems interact in a way to create program costs for the providers of crop insurance. Our methodology allows us to ascertain the relative contributions to program costs of these two sources of asymmetric information. The exercise is useful in pointing out directions for future study seeking ways to improve the design of crop insurance plans.

Keywords: Adverse selection; Crop insurance; Moral hazard (search for similar items in EconPapers)
Date: 2007

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Working Paper: Evaluating the Effects of Asymmetric Information in a Model of Crop Insurance (2007)
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