Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?

Johan Lagerlof and Christoph Schottmüller

Scandinavian Journal of Economics, 2018, vol. 120, issue 2, 465-502

Abstract: We model a monopoly insurance market in which consumers can learn their accident risks at a cost c. We then examine the welfare effects of a policy that reduces c. If c is sufficiently small (c c*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is successful, meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.

Date: 2018
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https://doi.org/10.1111/sjoe.12231

Related works:
Working Paper: Facilitating Consumer Learning in Insurance Markets?What Are the Welfare Effects? (2013)
Working Paper: Facilitating Consumer Learning in Insurance Markets - What Are the Welfare Effects? (2013)
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