Selection in Insurance Markets: Theory and Emprirics in Pictures

Liran Einav and Amy Finkelstein

No 10-016, Discussion Papers from Stanford Institute for Economic Policy Research

Abstract: We present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets. We begin by using this framework to review the "textbook" adverse selection environment and its implications for insurance allocation, social welfare, and public policy. We then discuss several important extensions to this classical treatment that are necessitated by important real world features of insurance markets and which can be easily incorporated in the basic framework. Finally, we use then same graphical approach to discuss the intuition behind recently developed empirical methods for testing for the existence of selection and examining its welfare consequences. We conclude by discussing some important issues that are not well-handled by this framework and which, perhaps not unrelatedly, have been little addressed by the existing empirical work.

Keywords: Insurance Markets; Selection; social welfare; public policy (search for similar items in EconPapers)
JEL-codes: G22 I11 (search for similar items in EconPapers)
Date: 2011-02
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Citations: View citations in EconPapers (136)

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Related works:
Journal Article: Selection in Insurance Markets: Theory and Empirics in Pictures (2011)
Working Paper: Selection in Insurance Markets: Theory and Empirics in Pictures (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:sip:dpaper:10-016

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