Preliminary Investigations for Better Monitoring: Learning in Repeated Insurance Audits

Reda Aboutajdine and Pierre Picard

Risks, 2018, vol. 6, issue 1, 1-22

Abstract: Audit mechanisms frequently take place in the context of repeated relationships between auditor and auditee. This paper focuses attention on the insurance fraud problem in a setting where insurers repeatedly verify claims satisfied by service providers (e.g., affiliated car repairers or members of managed care networks). We highlight a learning bias that leads insurers to over-audit service providers at the beginning of their relationship. The paper builds a bridge between the literature on optimal audit in insurance and the exploitation/exploration trade-off in multi-armed bandit problems.

Keywords: ex-post moral hazard; insurance fraud; optimal auditing; learning (search for similar items in EconPapers)
JEL-codes: C G0 G1 G2 G3 K2 M2 M4 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Preliminary investigations for better monitoring. Learning in repeated insurance audits (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:gam:jrisks:v:6:y:2018:i:1:p:15-:d:134056

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