Characterization and uniqueness of equilibrium in competitive insurance

• 成果类型: Article
• 署名作者: Luz, Vitor Farinha
• 署名单位: University of British Columbia
• 刊物名称: THEORETICAL ECONOMICS
• ISSN/ISSBN: 1555-7561
• DOI: 10.3982/TE2166
• 发表日期: 2017-09-01
• 页码: 1349-1391
• 关键词: Asymmetric and private information; mechanism design; oligopoly; economics of contracts; insurance

摘要

This paper provides a complete characterization of equilibria in a game-theoretic version of Rothschild and Stiglitz's (1976) model of competitive insurance. I allow for stochastic contract offers by insurance firms and show that a unique symmetric equilibrium always exists. Exact conditions under which the equilibrium involves mixed strategies are provided. The mixed equilibrium features (i) cross-subsidization across risk levels, (ii) dependence of offers on the risk distribution, and (iii) price dispersion generated by firm randomization over offers.