Bargaining power and efficiency in insurance contracts

John Quiggin and Robert Chambers ()

No WP5R07, Risk & Uncertainty Working Papers from Risk and Sustainable Management Group, University of Queensland

Abstract: Insurance contracts are frequently modelled as principal--agent relationships. Although it is commonly assumed that the principal, in this case the insurer, has complete freedom to design the contract, the problem formulation in much of the principal--agent literature presumes that the contract is constrained-Pareto-efficient. In the present paper, we consider the implications of a richer specification of the choices available to clients. In particular, we consider the entire spectrum of possible power differentials in the contracting relationship between insurers and clients. Our central result is that the agent can exploit information asymmetries to offset the bargaining power of the insurer, but that this process is socially costly.

JEL-codes: D82 G22 (search for similar items in EconPapers)
Date: 2007-03
New Economics Papers: this item is included in nep-cfn and nep-ias
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.uq.edu.au/rsmg/WP/WPR07_5.pdf (application/pdf)

Related works:
Journal Article: Bargaining Power and Efficiency in Insurance Contracts (2009)
Working Paper: Bargaining power and efficiency in insurance contracts (2005)
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:rsm:riskun:r07_5

Access Statistics for this paper

More papers in Risk & Uncertainty Working Papers from Risk and Sustainable Management Group, University of Queensland Contact information at EDIRC.
Bibliographic data for series maintained by David Adamson ( this e-mail address is bad, please contact ).