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Attar, Andrea, Mariotti, Thomas
and Salanié, François
(2014)
Multiple Contracting in Insurance Markets.
TSE Working Paper, n. 14-532, Toulouse
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Abstract
We study insurance markets in which privately informed consumers can purchase coverage from several insurers. Under adverse selection, multiple contracting severely restricts feasible trades. Indeed, only one budget-balanced allocation is implementable by an entry-proof tariff, and each layer of coverage must be fairly priced given the consumer types who purchase it. This allocation is the unique equilibrium outcome of a game in which cross-subsidies between contracts are prohibited. Equilibrium contracts exhibit quantity discounts and negative correlation between risk and coverage. Public intervention should target insurers’ strategic behavior, while consumers can be left free to choose their preferred amount of coverage.
| Item Type: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | 7 October 2014 |
| Place of Publication: | Toulouse |
| Uncontrolled Keywords: | Insurance Markets, Multiple Contracting, Adverse Selection |
| JEL Classification: | D43 - Oligopoly and Other Forms of Market Imperfection D82 - Asymmetric and Private Information D86 - Economics of Contract - Theory |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSM Research (Toulouse), TSE-R (Toulouse) |
| Institution: | Université Toulouse 1 Capitole |
| Site: | UT1 |
| Date Deposited: | 16 Mar 2015 14:51 |
| Last Modified: | 02 Apr 2021 15:49 |
| OAI Identifier: | oai:tse-fr.eu:28620 |
| URI: | https://publications.ut-capitole.fr/id/eprint/16609 |
