Pareto-improving asymmetric information in a dynamic insurance market

Thomas Garidel

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: This paper explored the dynamics of insurance markets under incomplete information. Various information structures are examined, according to the degree of communication between companies. We get equilibrium existence even when adverse selection arises through differentiated learning. This and the Pareto-dominance of private information structures seem to mitigate the prevalent view that adverse selection and competition do not match well in insurance markets; moreover, it provides a new scope for empirical studies. Technically, we extend to dynamics Rothschild-Stiglitz' equilibrium concept, and get to reconsider the "no-malus" property, which we prove to result from the non-consideration of feed-back effects of future on present.

Keywords: bonus/malus; information transmission; learning; one-sided commitment; switching (search for similar items in EconPapers)
JEL-codes: C70 G10 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1997-06-01
References: Add references at CitEc
Citations:

Downloads: (external link)
http://eprints.lse.ac.uk/119146/ Open access version. (application/pdf)

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:ehl:lserod:119146

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().