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Adverse Selection, Repeated Insurance Contracts and Announcement Strategy

Georges Dionne and Pierre Lasserre

Review of Economic Studies, 1985, vol. 52, issue 4, 719-723

Abstract: In this note, we present a strategy which relies on multi-period contracts and on a self-selection mechanism which induces the insured to announce his true risk in the first period, thus eliminating inefficiency due to adverse selection.

Date: 1985
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