EconPapers    
Economics at your fingertips  
 

Competitive Insurance Markets with Two Unobservables

Michael Smart

International Economic Review, 2000, vol. 41, issue 1, 153-69

Abstract: I study a screening game in a competitive insurance market in which insurance customers differ with respect to both accident probability and degree of risk aversion. It is shown that indifference curves of customers may cross twice; thus the single crossing property does not hold. When differences in risk aversion are sufficiently large, firms cannot use policy deductibles to screen high-risk customers. Types may be pooled in equilibrium or are separated by raising premiums above actuarially fair levels. This leads to excessive entry of firms in equilibrium. Copyright 2000 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (65)

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

Related works:
Working Paper: Competitive Insurance Markets with Two Unobservables (1996) Downloads
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:ier:iecrev:v:41:y:2000:i:1:p:153-69

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0020-6598

Access Statistics for this article

International Economic Review is currently edited by Harold L. Cole

More articles in International Economic Review from Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association 160 McNeil Building, 3718 Locust Walk, Philadelphia, PA 19104-6297. Contact information at EDIRC.
Bibliographic data for series maintained by Wiley-Blackwell Digital Licensing () and ().

 
Page updated 2025-03-31
Handle: RePEc:ier:iecrev:v:41:y:2000:i:1:p:153-69