An Econometric Analysis of Insurance Markets with Separate Identification for Moral Hazard and Selection

Shinya Sugawara () and Yasuhiro Omori ()

No CIRJE-F-882, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: This paper proposes a simple microeconometric framework that can separately identify moral hazard and selection problems in insurance markets. Our econometric model is equivalent to the approach that is utilized for entry game analyses. We employ a Bayesian estimation approach that avoids a partial identification problem. Due to the standard identification, we propose a statistical model selection method to detect an information structure that consumers face. Our method is applied to the dental insurance market in the United States. In this market, we find not only standard moral hazard but also advantageous selection, which has an intuitive interpretation in the context of dental insurance.

Pages: 44 pages
Date: 2013-03
New Economics Papers: this item is included in nep-cta, nep-ecm, nep-hea and nep-ias
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2013cf882

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