Multiple Dimensions of Private Information in Life Insurance Markets

Xi Wu and Li Gan ()

No 19629, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Conventional theory for private information of adverse selection predicts a positive correlation between insurance coverage and ex post risk. This paper shows the opposite in the life insurance market despite the clear evidence of private information on mortality risk. The reason for this contradictory result is the existence of multiple dimensions of private information. The paper discusses how the private information on insurance preference offsets the effect of the private information on mortality risk. A mixture density model is applied to disentangle these two effects.

JEL-codes: D82 G22 I13 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-cta and nep-ias
Note: AG EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published as Xi Wu & Li Gan, 2023. "Multiple dimensions of private information in life insurance markets," Empirical Economics, vol 65(5), pages 2145-2180.

Downloads: (external link)
http://www.nber.org/papers/w19629.pdf (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:nbr:nberwo:19629

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19629

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().