Categorizing Risks in the Insurance Industry

Michael Hoy

The Quarterly Journal of Economics, 1982, vol. 97, issue 2, 321-336

Abstract: This paper analyzes the welfare implications of imperfectly categorizing risks in the insurance industry under conditions of asymmetric information. Firms, initially unable to distinguish the risk type of individuals, are provided with imperfect information concerning risk membership. The paper then compares various Wilson-type equilibria to determine the welfare implications of firms imperfectly categorizing risks. It is shown that only in the case where the initial equilibrium is of the Nash no-subsidy type is there a Pareto-type improvement in welfare.

Date: 1982
References: Add references at CitEc
Citations: View citations in EconPapers (59)

Downloads: (external link)
http://hdl.handle.net/10.2307/1880761 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
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:oup:qjecon:v:97:y:1982:i:2:p:321-336.

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

More articles in The Quarterly Journal of Economics from President and Fellows of Harvard College
Bibliographic data for series maintained by Oxford University Press ().