Multidimensional private information, market structure, and insurance markets

• 成果类型: Article
• 署名作者: Fang, Hanming; Wu, Zenan
• 署名单位: University of Pennsylvania; National Bureau of Economic Research; Peking University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12251
• 发表日期: 2018
• 页码: 751-787
• 关键词: Adverse selection; asymmetric information; moral hazard; advantageous selection; RISK; equilibrium; uncertainty; COMPETITION; ECONOMICS; welfare

摘要

We investigate whether selection based on multidimensional private information in risks and risk preferences can, under different market structures, result in a negative correlation between insurance coverage and expost realization of risk. We show that, under perfect competition, selection based on multidimensional private information does not result in the negative correlation property, unless there is a sufficiently high loading factor. However, it is possible to generate the negative correlation property under monopoly when risk and risk preference types are sufficiently negative dependent. We also clarify the connections between important concepts such as adverse/advantageous selection and positive/negative correlation property.