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Genetic testing and repulsion from chance

Michael Hoel (), Tor Iversen (), Tore Nilssen () and Jon Vislie

No 20/2003, Memorandum from Oslo University, Department of Economics

Abstract: A central theme in the international debate on genetic testing concerns the extent to which insurance companies should be allowed to use genetic information in their design of insurance contracts. We analyze this issue within a model with the following important feature: A person’s well-being depends on the perceived probability of becoming ill in the future in a way that varies among individuals. We show that both tested high-risks and untested individuals are equally well off whether or not test results can be used by insurers. Individuals who test for being low-risks, on the other hand, are made worse off by not being able to verify this to insurers. This implies that verifiability dominates nonverifiability in an ex-ante sense.

Keywords: Genetic testing; asymmetric information; insurance (search for similar items in EconPapers)
JEL-codes: D82 I11 I18 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2003-06-06
New Economics Papers: this item is included in nep-edu
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Published in Journal of Health Economics, 2006, pages 847-860.

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Working Paper: Genetic testing and repulsion from chance (2009) Downloads
Working Paper: Genetic Testing and Repulsion from Chance (2004) Downloads
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