Ex post Moral Hazard in Crop Insurance: Costly State Verification or Falsification?

Roderick Rejesus

Economic Issues Journal Articles, 2003, vol. 8, issue 2, 29-46

Abstract: This article examines the extent to which actual crop insurance indemnification behaviour conforms to the theoretical predictions of two ex post moral hazard models ? costly state verification and costly state falsification ? and then explores whether the closely conforming model can indeed help deter ex post moral hazard in the United States (US) crop insurance program. The results suggest that indemnification behaviour in crop insurance is more in line with the costly state verification model. Following the theoretical predictions of the costly state verification model, however, may not be the optimal policy to deter ex post moral hazard since it is possible for insured producers to deceive loss adjusters and for loss magnitudes to not be truthfully verified.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.economicissues.org.uk/Files/2003/203bEx ... norFalsification.pdf (application/pdf)

Related works:
Working Paper: EX POST MORAL HAZARD IN CROP INSURANCE: COSTLY STATE VERIFICATION OR FALSIFICATION? (2002)
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:eis:articl:203rejesus

Access Statistics for this article

More articles in Economic Issues Journal Articles from Economic Issues Contact information at EDIRC.
Bibliographic data for series maintained by Dan Wheatley ().