The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data
Georges Dionne (georges.dionne@hec.ca)
Cahiers de recherche from CIRPEE
Abstract:
We discuss the difficult question of measuring the effects of asymmetric information problems on resource allocation. Three problems are examined: moral hazard, adverse selection, and asymmetric learning. One theoretical conclusion, drawn by many authors, is that information problems may introduce significant distortions into the economy. However, we verify, in different markets, that efficient mechanisms have been introduced in order to reduce these distortions and even eliminate, at the margin, some residual information problems. This conclusion is stronger for pure adverse selection. One explanation is that adverse selection is related to exogenous characteristics, while asymmetric learning and moral hazard are due to endogenous actions that may change at any point in time. Dynamic data help to identify the three information problems by permitting causality tests.
Keywords: Empirical measure; information problem; moral hazard; adverse selection; learning; insurance fraud; causality tests; dynamic data (search for similar items in EconPapers)
JEL-codes: C12 C18 C23 C25 C26 D80 G11 G22 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-cta and nep-ias
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Citations: View citations in EconPapers (4)
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Working Paper: The empirical measure of information problems with emphasis on insurance fraud and dynamic data (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:1233
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