The informational content of household decisions with applications to insurance under asymmetric information

Georges Dionne (), Christian Gouriéroux and Charles Vanasse
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Christian Gouriéroux: Toulouse School of Economics
Charles Vanasse: Université de Montréal

No 00-0, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: We discuss how to detect the informational content of household decisions among the explanatory variables of econometric models. Two applications on the choice of automobile insurance contracts and the demand for life insurance are provided. We show that the information provided by additional decision variables is rather weak and often non significant. In particular, there is no residual asymmetric information when appropriate risk classification is applied in automobile insurance; so, the choice of a deductible does not reveal any information about individual risk. Similarly, the choice of a particular portfolio does not add information on risk aversion in life insurance contracting.

Keywords: nformational content; household decisions; automobile insurance; demand for life insurance; residual asymmetric information; risk classification; deductible; risk aversion; conditional independence; endogenous choice (search for similar items in EconPapers)
JEL-codes: C25 D81 G11 G22 (search for similar items in EconPapers)
Pages: 28 pages
Date: 1998-01-03
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