Imperfect information and participation in insurance markets: evidence from Italy

Fabio Santeramo

Agricultural Finance Review, 2018, vol. 78, issue 2, 183-194

Abstract: Purpose - The purpose of this paper is to investigate how experience in insurance contracts may influence participation in the Italian crop insurance market. Design/methodology/approach - From Italian farm-level data, the author estimates a dynamic discrete choice model of participation to investigate the role of experience. The methodology, coupled with exploratory analysis of the data, allows one to compare the relevance of different sources of experience in the crop insurance decision-making process. Findings - The author found that experience tends to be a catalyst for insurance participation. Policy implications are discussed, in particular, the author discusses on the importance of bolstering uptake to exploit the advantages of the inertia that emerge from experience, and the importance of initiatives to increase the knowledge of crop insurance instruments. Originality/value - To the best of the author’s knowledge, the role of experience has been underinvestigated. The analysis has the specific contribution of modeling the potential role of experience (exploited after buying an insurance contract) on uptake in crop insurance programs.

Keywords: Italy; Asymmetric information; Dynamic model; Familiarity; Imperfect knowledge; Uptake; G22; Q12; Q18 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (19)

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Working Paper: Imperfect Information and Participation in Insurance Markets: Evidence from Italy (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:eme:afrpps:afr-06-2017-0053

DOI: 10.1108/AFR-06-2017-0053

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