Adverse Selection in an Insurance Market with Government-Guaranteed Subsistence Levels

Bum Kim () and Harris Schlesinger

No 1217, CESifo Working Paper Series from CESifo

Abstract: We consider a competitive insurance market with adverse selection. Unlike the standard models, we assume that individuals receive the benefit of some type of potential government assistance that guarantees them a minimum level of wealth. For example, this assistance might be some type of government-sponsored relief program, or it might simply be some type of limited liability afforded via bankruptcy laws. Government assistance is calculated ex post of any insurance benefits. This alters the individuals’ demand for insurance coverage. In turn, this affects equilibria in various insurance models of markets with adverse selection.

Keywords: adverse selection; insurance; government relief (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-ias, nep-mic and nep-sea
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Citations: View citations in EconPapers (4)

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Journal Article: Adverse Selection in an Insurance Market With Government‐Guaranteed Subsistence Levels (2005)
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