Regulating Insurance Markets: Multiple Contracting and Adverse Selection

Thomas Mariotti, Andrea Attar and Salanié, François
Authors registered in the RePEc Author Service: François Salanié

No 16531, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper studies an insurance market on which privately informed consumers can simultaneously trade with several firms operating under a regulation that prohibits cross-subsidies between contracts. The regulated game supports a single equilibrium allocation in which each layer of coverage is fairly priced given the consumer types who purchase it. This competitive allocation cannot be Pareto-improved by a social planner who observes neither consumers' types nor their trades with firms. Public intervention under multiple contracting and adverse selection should thus arguably target firms' pricing strategies, leaving consumers free to choose their preferred amount of coverage.

Keywords: Insurance markets; Regulation; Multiple contracting; Adverse selection (search for similar items in EconPapers)
JEL-codes: D43 D82 D86 (search for similar items in EconPapers)
Date: 2021-09
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Related works:
Journal Article: REGULATING INSURANCE MARKETS: MULTIPLE CONTRACTING AND ADVERSE SELECTION (2022)
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2022)
Working Paper: Regulating Insurance Markets: Multiple Contracting and Adverse Selection (2021)
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