Optimal Insurance Design: What Can We Do Without Expected Utility?

Christian Gollier ()

Working Papers from Toulouse - GREMAQ

Abstract: This paper provides a survey on optimal insurance when insurers and policy holdes have symmetric information about the distribution of potential damages. When transaction costs are proportional to transfers, we show that 1)there is at least one state of the world where no indemnity is paid, 2) the indemnity schedule is deterministic, implying in particular umbrella policies are optimal, and 3) the optimal contract contains a straight deductible. This is proven without assuming expected utility. The use of expected utility generates additional results, e.g. in the case of nonlinear trnsaction costs.

Keywords: INSURANCE (search for similar items in EconPapers)
JEL-codes: G22 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:gremaq:97.463

Access Statistics for this paper

More papers in Working Papers from Toulouse - GREMAQ GREMAQ, Universite de Toulouse I Place Anatole France 31042 - Toulouse CEDEX France.. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().