Information design in competitive insurance markets

• 成果类型: Article
• 署名作者: Garcia, Daniel; Tsur, Matan
• 署名单位: University of Vienna; Leibniz Association; Ifo Institut; University of Bristol
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2020.105160
• 发表日期: 2021
• 关键词: insurance markets; adverse selection; information design

摘要

This paper characterizes the optimal information structure in competitive insurance markets with adverse selection. We consider a regulator that assigns ratings to individuals according to their expected costs. Insurers observe these ratings and compete as in Akerlof (1970). The optimal rating system minimizes exante risk subject to participation constraints. We prove that in any such market there exists a unique optimal system under which all individuals trade and the ratings match low-cost types with high-cost types negative assortatively. We provide a simple algorithm that yields the optimal system and examine implications for government regulations of insurance markets. (C) 2020 The Author(s). Published by Elsevier Inc.