Separating moral hazard from adverse selection and learning in automobile insurance: Longitudinal evidence from France

Georges Dionne (), Pierre-Carl Michaud and Maki Dahchour
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Maki Dahchour: Aviva Canada

No 10-5, Working Papers from HEC Montreal, Canada Research Chair in Risk Management

Abstract: The identification of information problems in different markets is a challenging issue in the economic literature. In this paper, we study the identification of moral hazard from adverse selection and learning within the context of a multi-period dynamic model. We extend the model of Abbring et al. (2003) to include learning and insurance coverage choice over time. We derive testable empirical implications for panel data. We then perform tests using longitudinal data from France during the period 1995-1997. We find evidence of moral hazard among a sub-group of policyholders with less driving experience (less than 15 years). Policyholders with less than 5 years of experience have a combination of learning and moral hazard, whereas no residual information problem is found for policyholders with more than 15 years of experience.

Keywords: Moral hazard; adverse selection; learning; dynamic insurance contracting; panel data; empirical test (search for similar items in EconPapers)
JEL-codes: C30 C32 C33 C35 D81 D82 G22 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2010-08-01
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Related works:
Journal Article: SEPARATING MORAL HAZARD FROM ADVERSE SELECTION AND LEARNING IN AUTOMOBILE INSURANCE: LONGITUDINAL EVIDENCE FROM FRANCE (2013)
Working Paper: Separating Moral Hazard from Adverse Selection and Learning in Automobile Insurance: Longitudinal Evidence from France (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:ris:crcrmw:2010_005

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