Welfare-Improving Asymmetric Information in a Dynamic Insurance Market

T. de Garidel

Working Papers from Laval - Laboratoire Econometrie

Abstract: We provide a two-period model of competition in insurance market under incomplete information. Each agent, together with his initial insurer, learns about his type through accidents, but other insurers may not, depending on informational structures. We show that (i) keeping information about accidents claims private is welfare-improving, (ii) such a policy does not jeopardize the existence of an equilibrium, despite adverse selection arises endogenously, and (iii) this equilibrium exhibits both bonus and malus.

Keywords: COMPETITION; SOCIAL WELFARE; INSURANCE; ADVERSE SELECTION (search for similar items in EconPapers)
JEL-codes: D82 G22 (search for similar items in EconPapers)
Pages: 51 pages
Date: 1997
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Citations: View citations in EconPapers (1)

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