https://scholars.lib.ntu.edu.tw/handle/123456789/414415
Title: | Hidden regret in insurance markets | Authors: | Huang R.J. Muermann A. Tzeng L.Y. |
Issue Date: | 2016 | Journal Volume: | 83 | Journal Issue: | 1 | Start page/Pages: | 181-216 | Source: | Journal of Risk and Insurance | Abstract: | We examine insurance markets with two-dimensional asymmetric information on risk type and on preferences related to regret. In contrast to Rothschild and Stiglitz (), the equilibrium can be efficient; that is, it can coincide with the equilibrium under full information. Furthermore, we show that pooling, semipooling, and separating equilibria can exist. Specifically, there exist separating equilibria that predict a positive correlation between the level of insurance coverage and risk type, as in the standard economic models of adverse selection, but there also exist separating equilibria that predict a negative correlation between the level of insurance coverage and risk type. Since optimal choice of regretful customers depends on foregone alternatives, the equilibrium includes a contract that is offered but not purchased. ? American Risk and Insurance Association. |
URI: | https://scholars.lib.ntu.edu.tw/handle/123456789/414415 | ISSN: | 00224367 | DOI: | 10.1111/jori.12096 |
Appears in Collections: | 財務金融學系 |
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