Optimal Insurance Under Random Auditing

Marie-Cecile Fagart and Pierre Picard

Working Papers from Paris X - Nanterre, U.F.R. de Sc. Ec. Gest. Maths Infor.

Abstract: We provide a characterization of an optimal insurance contract (coverage schedule and audit policy) when the monitoring procedure is random. When the policyholder exhibits constant absolute risk aversion, the optimal contract involves a positive indemnity payment with a deductible when the magnitude of damages exceeds a threshold.

Keywords: INSURANCE; RISK AVERSION; AUDITING (search for similar items in EconPapers)
JEL-codes: D81 G22 (search for similar items in EconPapers)
Pages: 39 pages
Date: 1998
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Citations: View citations in EconPapers (13)

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Related works:
Journal Article: Optimal Insurance Under Random Auditing (1999)
Working Paper: Optimal Insurance Under Random Auditing (1998)
Working Paper: Optimal insurance under random auditing (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:pnegmi:9808

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