The demand for health insurance in a multirisk context
|
|
- Phyllis Watkins
- 6 years ago
- Views:
Transcription
1 GATE Groupe d Analyse et de Théorie Économique MR 584 du CNR DOCMENT DE TRAVAI - WORKING PAPER W.P The demand for health insurance in a multirisk context Mohamed Anouar Razgallah Mai 005 GATE Groupe d Analyse et de Théorie Économique MR 584 du CNR 9 chemin des Mouilles 690 Écully France B.P Écully Cedex Tél. + (0) Fax + (0) Messagerie électronique gate@gate.cnrs.fr erveur Web :
2 The demand for health insurance in a multirisk context a demande d assurance santé dans un contexte multirisque Mohamed Anouar Razgallah GATE niversity of yon Mai 005 Abstract sing a model of bivariate decision under risk, we analyse the health insurance demand when there are two sources of risk: a health risk and an uninsurable one. We examine how the uninsurable risk affects the coverage of the health risk. We show that the determinants of the demand for health insurance are not only the correlation between the health and uninsurable risks as shown by Doherty and chlesinger (98a) and the variation of the marginal utility of wealth with respect to the health status (Rey, 00) but also the way in which the occurrence of the uninsurable risk affects the marginal utility of wealth. Résumé En utilisant un modèle bivarié de décision dans le risque, nous analysons la demande d assurance santé dans un contexte où un individu fait face à deux risques de nature différente : un risque de santé et un risque non assurable. Nous examinons l impact d un risque non assurable sur la couverture du risque de santé. Nous montrons que les principaux déterminants de la demande d assurance santé sont non seulement la corrélation entre le risque de santé et le risque non assurable comme l ont montré Doherty et chlesinger (98a) et l utilité marginale de la richesse en fonction de l état de santé (Rey, 00) mais aussi la manière dont la réalisation du risque non assurable affecte l utilité marginale de la richesse. Mots clés : risques corrélés, assurance santé, utilité contingente Keywords: Correlated risks, Health insurance, tate-dependent utility JE CAIFICATION: D8, I, I8 razgallah@gate.cnrs.fr Groupe d Analyse et de Théorie Economique,MR 584 D cnrs 9, chemin des mouilles, 690 Ecully - France I am grateful for the helpful comments and suggestions given by aurent Flochel. I am also grateful to Florence Goffette-Nagot for very useful comments.
3 Introduction The analysis of the optimal health insurance was strongly influenced by three propositions. The first proposition is the Bernoulli principle. It states that risk-averse agents will choose full coverage when the premium is actuarially fair. The second proposition derives from by Mossin-mith (968). In their pioneering paper, Mossin-mith (968) showed that if the premium for insurance is loaded, the individual chooses less than full insurance. The third proposition is proposed by Arrow (96). It states that a risk-averse agent will prefer a franchise contract to a coinsurance contract. Doherty and chlesinger (98a) show, in the presence of an uninsurable financial risk, that sufficient conditions for the validity of these propositions depend on the correlation between insurable and uninsurable risks. However, Doherty and chlesinger (98a) use a oneargument utility function. Rey (00) takes into account this limit by using a bivariate utility function. he shows that the determinants of the demand for health insurance are not only the correlation between the health and uninsurable risks but also the variation of the marginal utility of wealth with respect to the health status. However, Rey (00) imposes restrictive assumptions on the health risk. he assumes that illness is characterized only by a decrease in health status. However, since there exist curative cares, which are costly for individuals, the health risk induces both a loss in the health status and a financial loss. This paper extents the result obtained by Rey (00) to this framework. We also consider an uninsurable risk (For example an accident risk). The aim of this paper is to examine how the uninsurable risk affects the coverage of the health risk. We show that the optimal health insurance depends crucially on the way in which the occurrence of the uninsurable risk affects the marginal utility of wealth. The organization of this article is as follows. The next section introduces the model. The section that follows examines the optimal coinsurance contracts. ection 4 analyses the optimal insurance policy. The last section concludes. The model We consider an individual who derives utility from wealth W and from its health stock H. We use a Von Neumann Morgenstern two-arguments utility function (W,H). We assume for
4 standard concavity assumptions: > 0, > 0, < 0, < 0 and ( ) > 0. We don t impose any restriction on the sign of, the cross second derivative of. The agent has an initial health stock H 0, an initial wealth stock W 0 and he becomes ill with a probability. The disease implies a health loss D. In case of disease, there exist exogenous p curative cares at cost c for the individual. With a probability p, the agent faces an uninsurable loss. We denote V(W,H) the utility function when the uninsurable loss occurs, with V(W,H) < (W,H). Indeed, the realisation of the uninsurable loss always decreases the utility of wealth and health for risk-averse preferences (Cook and Graham (977)). We assume for V standard assumptions: V > 0, V > 0, V < 0, V < 0 and V V (V ) > 0. We don t impose any restriction on the sign of the variation of the marginal utility of wealth with respect to the uninsurable loss. Three cases are possible. - The occurrence of the uninsurable loss may leave the individual s marginal utility of wealth unchanged: (W,H) = V (W,H). In this case, the uninsurable loss does not effect the wealth uncertainty. - The occurrence of the uninsurable loss may increase the individual s marginal utility of wealth: (W,H) < V (W,H). In this case, the uninsurable loss plays as a hedge against wealth uncertainty. - The occurrence of the uninsurable loss may decrease the individual s marginal utility of wealth: (W,H) > V (W,H). In this case, the uninsurable loss plays as an amplifier of wealth uncertainty.
5 Optimal Coinsurance Contracts To examine the optimal coinsurance contracts 4, we consider a coinsurance health contract in which the insurance reimburses c of the expense in health care. The premium for insurance level is ) p P = ( + m c, where m is the loading factor, m 0. Four states of nature can appear. tility levels and probabilities of occurrence are characterized as follows. tate : (W 0 - P ( ) tate : (W 0 - P( )- ( ) tate : V (W 0 - P ( ) tate 4: V(W 0 - P( )- ( ), H 0 ) no loss occurs c, H0 - D + ) only the insurable loss occurs, H 0 ) only the uninsurable loss occurs c, H0 - D + ) the two loss occurs. We note Π the probability of occurrence of state i (i =.4). i They are defined as follows: Π = p p p p / p p / Π = ( - ) Π = - p p p / Π 4 = p p / Where (resp. ) denotes the probability of occurrence of the insurable (resp. uninsurable) p p loss and p / the conditional probability of the uninsurable loss given the insurable loss. We don t impose restriction on the correlation between the losses. The tree cases are possible: the insurable loss and the uninsurable loss are independent ( = ), the insurable loss and the uninsurable loss are positively correlated ( < ) and the insurable loss and the uninsurable loss are negatively correlated ( > ). p p p / p / The optimal level of insurance is solution of the following program: max ( ) Π 0 - ( ) E = (W + V(W Π 0 - ( ) P, H 0 ) + P, H 0 ) + V(W 4 p p / Π (W 0 - P( )- ( ) Π 0 - P( )- ( ) c, H 0 - D + ) c, H 0 - D + ) () 4 The optimal coinsurance contracts is the individual s optimal insurance demand for given health expenditures. 4
6 First order condition writes 5 : ( ) E ' = c [ Z (W, H ) ( - Where: D ( + m) p ) - ( - ) + m Z (W, H 0 ) ] + p ( p / - ) c { ( + m) p [F(W, H 0 - D + )- F(W, H 0 )] W = W 0 - P ( ) et W = W 0 - P( )- ( ) c - F (W, H 0 - D + )} (6) Z(W, H) = ( - ) (W, H) + p V(W, H) p F(W,H) = (W, H) - V(W, H). To examine the optimal coinsurance contracts, we consider in turn two situations: the situation where the premium is actuarially fair ( m = 0) and the situation where the premium is loaded ( m > 0).. The premium is actuarially fair In this section, we examine optimal coinsurance contracts where the premium is actuarially fair ( m = 0). The actuarially fair insurance premium is such premium when the expected loss of the insurance company equals exactly the revenue from insurance premium. Two situations are possible: the situation where the individual treats himself perfectly ( = D ) and the situation where he does not ( < D ). Firstly, let us consider the case where the individual treats himself perfectly ( = D ). If the premium for insurance is actuarially fair then equation (6) may be written as: ( ) E ' = c ( - p ) [ Z(W, H 0 - D + ) - Z(W, H 0 ) ] + ( - ) { p [F(W, H 0 - D + )- F(W, H 0 )] p p / c - F (W, H 0 - D + )} (8) From equation (8), we obtain in the case where the individual treats himself perfectly ( = D ): 5 see proof developped in Appendix. 5
7 Proposition (Complete curing) If the premium for insurance is actuarially fair ( m = 0), the individual chooses full insurance ( = ) if one of the following conditions is true: p / - The insurable loss and the uninsurable loss are positively correlated ( > p ) and the occurrence of the uninsurable loss increases the individual s marginal utility of wealth ( < V ). p / - The insurable loss and the uninsurable loss are negatively correlated ( < p ) and the occurrence of the uninsurable loss decreases the individual s marginal utility of wealth ( > V ). Proof. ee appendix.. et us now turn to the case where the individual doesn t treat himself perfectly ( < D ). We obtain: Proposition (Partial curing) If the premium for insurance is actuarially fair ( m = 0), the individual chooses full insurance ( = ) if one of the following conditions is true: - The insurable loss and the uninsurable loss are independent ( > p ) and the cross derivative of is negative or null ( 0). p / p / - The insurable loss and the uninsurable loss are positively correlated ( > p ), the cross derivative of is negative or null ( 0) and the occurrence of the uninsurable loss increases the individual s marginal utility of wealth ( < V ). p / - The insurable loss and the uninsurable loss are negatively correlated ( < p ), the cross derivative of is negative or null ( 0) and the occurrence of the uninsurable loss decreases the individual s marginal utility of wealth ( > V ). Proof. ee appendix.. The positive sign of the cross derivative of ( > 0) means that the marginal utility of the composite material good (W) increases with health status (H) and reciprocally. Rey (00) obtains that when the insurable and the uninsurable risks are negatively correlated and < 0, full coverage is optimal if the premium is actuarially fair. We show that this result is true if the occurrence of the uninsurable loss increases the individual s marginal utility of 6
8 wealth. The sign of the variation of the marginal utility of wealth with respect to the uninsurable loss is crucial when studying individual s optimal insurance demand.. The premium is loaded In this section we examine the individual s optimal insurance demand when the premium for insurance is loaded ( m > 0). Firstly, let us consider the case where the individual treats himself perfectly ( = D ). We obtain: Proposition (Complete curing) If the premium for insurance is loaded ( m > 0), the individual chooses less than full insurance ( < ) if one of the following conditions is true: - p / = p p / - The insurable loss and the uninsurable loss are positively correlated ( > p ) and the occurrence of the uninsurable loss decreases the individual s marginal utility of wealth ( > V ). p / - The insurable loss and the uninsurable loss are negatively correlated ( < p ) and the occurrence of the uninsurable loss increases the individual s marginal utility of wealth ( < V ). Proof. ee appendix.. et us now turn to the case where the individual doesn t treats himself perfectly ( < D ). We obtain: Proposition 4 (Partial curing) If the premium for insurance is loaded ( m > 0), the individual chooses less than full insurance ( < ) if one of the following conditions is true: p / - = p and 0 p / - > p, 0, > V and > V p / - < p, < 0, < V and < V. Proof. ee appendix.4. Contrary to Rey (00), the determinants of the demand for health insurance depend not only on the correlation between the insurable and the uninsurable losses risks and the variation of 7
9 the marginal utility of wealth with respect to the health status, but also on the way in which the occurrence of the uninsurable risk affects the marginal utility of wealth. 4 Optimal Insurance Policy The Arrow theorem states that a risk-averse agent will prefer a franchise contract to a coinsurance contract. To examine the validity of this theorem to our framework, we extent our previous model to the case where the individual faces three losses: - a small health loss - a large health loss - an uninsurable loss We define six states of nature. tility levels and probabilities of occurrence are characterized as follows: tate : (W 0, H 0 ). No loss occurs. tate : (W 0 - c ), H0 - D + ). Only the insurable small health loss occurs. ( ( ) tate : (W 0 - c, H0 - D + ). Only the insurable large health loss occurs tate 4: V(W 0, H 0 ). Only the uninsurable loss occurs. tate 5: V(W 0 - c( ), H0 -D + ). The uninsurable and the insurable small health losses occurs. tate 6: V(W 0 - c( ), H0 -D + ). The uninsurable and the insurable large health losses occurs. We note Π the probability of occurrence of state i (i =.6). i They are defined as follows: Π = - p - - p + p + Π = p - p p p / p / p p / Π = p - p p / Π = p - p - 4 p / p p / Π 5 = p p / Π 6 = p p / Where p and p denotes the probabilities of and, respectively. 8
10 We consider two insurance policies defined as follows: Franchise contract c F = 0 ( )-c in states and 6 otherwise F is a deductible policy with deductible level c ( ). Coinsurance contract c C = c 0 ( ) ( ) + ( - f )[ c( ) c( )] C is a proportional basis policy. in states and 5 in states and 6 in statesand 4 However, coinsurance and franchise contracts are available at the same premium. We obtain: P = with f c ( p + ) + (- ( ) = c p f ( )) [ c - c( ) + p c p 6. c ] = [ c - c ] p. The optimal level of coinsurance is solution of the following program: = arg max ( ) E = Π (W 0 - P, H 0 ) + p + Π (W0 - P - p + Π V(W 4 0- P, H 0 ) + Π V(W First order condition writes: ( ) c Π E ' = (W p - p Π (W 0 - P - ( ) P - ( ) ( ) c, H 0 - D + ) c, H 0 - D + ) c, H 0 - D + ) p + Π 6 V(W0 - P - c( )-, H 0 - D + ) (5) p 0 - P - ( ) c( ) Π (W Π c 0 - P - ( ) + V (W 5 c, H 0 - D + ) 0 - P - p c ( ) p, H 0 - D + ) c, H 0 - D + ) + Π 6 p p c ( ) V (W 0 - P - p c( ) p -, H 0 - D + ) (6) 6 see proof developped in Appendix. 9
11 Proposition 5 The Arrow theorem only holds when one of the following conditions is true: - = V - = V = 0 - < 0 and V > 0 Proof. ee appendix 4. Proposition 5 shows the importance of the knowledge of the way in which the occurrence of the uninsurable risk affects the marginal utility of wealth to determine the optimal insurance policy. 5 CONCION In this article, we view health insurance as a combined hedge against the two consequences of falling ill: treatment expenditures and loss in health status. We use a bivariate utility function depending both on the wealth and health. We don t impose any restriction on the sign of the variation of the marginal utility of wealth with respect to the uninsurable loss. We have shown that it is difficult to obtain classical results of insurance theory in the health case. We have concluded that the determinants of the demand for health insurance are not only the correlation between the health and uninsurable risks and the variation of the marginal utility of wealth with respect to the health status but also the way in which the occurrence of the uninsurable risk affects the marginal utility of wealth. Appendix Appendix The optimal level of insurance is solution of the following program: max ( ) Π 0 - ( ) E = (W + V(W Π 0 - ( ) P, H 0 ) + P, H 0 ) + V(W Where: P ( ) = ( + m ) p 4 Π (W 0 - P( )- ( ) Π 0 - P( )- ( ) c denote the premium for insurance. c, H 0 - D + ) c, H 0 - D + ) () 0
12 Replacing the probabilities by their expressions, equation () writes as follows: E = { [( - ) (W p + V(W p p / p 0 - P( )- ( ) p 0 - P( )- ( ) + ( - )[( - ) (W p + { ( - ) [(W p 0 - ( ) c, H 0 - D + ) c, H 0 - D + )] p 0 - ( ) P, H 0 ) + V(W P, H 0 )]} p 0 - P ( ), H 0 )- V(W 0 - P ( ), H 0 ) - (W 0 - P( )- ( ) + V(W 0 - P( )- ( ) c, H 0 - D + ) c, H 0 - D + )]} () Or in a more compact form: ( ) E = { Z(W Where: p 0 - P( )- ( ) p p / +{ ( - )[F(W c, H0 - D + ) + ( - ) Z(W p 0 - ( ) p 0 - P ( ), H 0 )- F(W 0 - P( )- ( ) P, H 0 )} c, H 0 - D + )]} () Z(W, H) = ( - ) (W, H) + p V(W, H) p p / p p / A(,W,H) = ( - ) [(W p 0 - P ( ), H 0 )- V(W 0 - ( ) - (W 0 - P( )- ( ) + V(W 0 - P( )- ( ) P, H 0 ) c, H 0 - D + ) c, H 0 - D + )] F(W,H) = (W, H) - V(W, H). Consequently, the optimal level of insurance is solution of the following program: = arg max ( ) E = { Z(W p 0 - P( )- ( ) + ( - ) Z(W p 0 - ( ) p p / + { ( - )[F(W P,H 0 )} c, H 0 - D + ) p 0 - P ( ), H 0 )- F(W 0 - P( )- ( ) c, H0 - D + )]} (4) First order condition writes: ( ) E ' = c [ (W p p / Z 0 - P( )- ( ) - ( - p ) ( + m) (W + ( - ) { + m [F c D ( + m) c, H ) ( - Z 0 - ( ) P, H 0 )] p (W 0 - P( )- ( ) - c F(W 0 - P( )- ( ) ) p D (W 0 - ( ) c, H )- F c, H 0 - D + )} (5) P, H 0 )]
13 Equation (5) can be written as follows: ( ) E ' = c [ Z (W, H ) ( - p p / D ( + m) + ( - ) { + m p [F(W, H )- F p ( ) c Where: W = W 0 - P ( ) et W = W 0 - P( )- ( ) c p ) - ( - ) + m Z (W, H 0 ) ] D (W, H 0 )]- c F (W, H 0 - D + )} (6) econd order condition writes: ( ) E '' = { Π ( + m) p ( c ) (W 0 - ( ) P, H 0 ) + Π ( ) c [ ( + m) p ] (W 0 - P( )- ( ) Π ( + ) ( p ) ( c ) (W 0 - ( ) + m V + + m p V 4 P, H 0 ) Π ( c ) [ ] (W 0 - P( )- ( ) c, H 0 - D + ) c, H 0 - D + )} < 0 (7) The second order condition is satisfied because ''( ) E is always negative. Appendix Appendix. The strict concavity of the first-order condition for maximizing () = E' 0. () E ' writes: () E ensures that full coverage is optimal ( = ) if and only if E ( ) evaluated at full coverage is nonnegative: E ' = - p ( p / - ) c [(W 0 - c, H 0 )- V (W 0 - c, H 0 )] (9) If = p then < p / If > p then p / =if <if < V > V If < p then p / =if <if > V < V
14 Appendix. The strict concavity of the first-order condition for maximizing () = E' 0. () E ' writes: () E ensures that full coverage is optimal ( = ) if and only if E ( ) evaluated at full coverage is nonnegative: E ' = ( - p ) c [ Z (W0 - c, H 0 - D + ) - Z( W0 - c, H 0 ) ] - p ( p / - ) c [(- p ) F(W 0 - c, H 0 - D + ) + p F(W 0 - c, H0)] (0) However, the sign of is equal to the sign of Z. From the equation (0), we obtain: If = p then p / =if < if 0 > 0 If > p then p / =if <if 0 and > 0 and < V > V If < p then p / =if <if 0 and > 0 and > V < V Appendix. The strict concavity of the first-order condition for maximizing () = E' 0. () E ' writes: () E ensures that full coverage is optimal ( = ) if and only if E ( ) evaluated at full coverage is nonnegative: E ' = - [ m Z (W0 - c, H0 ) + p ( p / - ) c F (W 0 - c, H 0 )] () From the equation (0), we obtain:
15 If = p then < p / If > p then p / =is possible if <if > V < V If < p then p / =is possible if <if < V > V Appendix.4 The strict concavity of the first-order condition for maximizing () = E' 0. () E ' writes: () E ensures that full coverage is optimal ( = ) if and only if E ( ) evaluated at full coverage is nonnegative: E ' = ( - p ) ( + m) [ Z (W, H 0 - D + ) - Z(W, H 0 ) ] - m Z (W, H 0 - D + ) + ( - ) { + m p [F(W, H 0 - D + )- F(W, H 0 )] p p / p c - F (W, H 0 - D + )} () However, the sign of is equal to the sign of Z. From the equation (8), we obtain: If = p then p / =is possible if < if 0 < 0 If > p then p / =is possible if < 0, < V and <if 0, > V and > V < V If < p then p / =is possible if 0, > V and <if < 0, < V and < V > V Appendix We consider two insurance policies defined as follows: Franchise contract c F = 0 ( )-c in states and 6 otherwise F is a deductible policy with deductible level c ( ). 4
16 Coinsurance contract c C = c 0 ( ) ( ) + ( - f )[ c( ) c( )] C is a proportional basis policy. in states and 5 in states and 6 in statesand 4 In the case of a coinsurance contract, the profit of the insurance company is defined as follows: tate P with Π tate P - c ( ) with Π tate P - [ ( c ) + (- f ( )) [ c - c ]] with Π tate 4 P with Π 4 tate 5 P - c ( ) with Π 5 tate 6 P - [ ( E ( π ) = P - [ c ) + (- f ( )) [ c - c ( p + ) + (- However, E ( π ) = 0 Thus P = c ( p + ) + (- c ]] with Π 6 p f ( )) [ c - p f ( )) [ c - c ] ] p c ] () p In the case of a franchise contract, the profit of the insurance company is defined as follows: tate P with Π tate P with Π tate P - [ c - c )] with Π ( tate 4 P with Π 4 tate 5 P with Π 5 c tate 6 P - [ - c ] with Π 6 E c π = P - [ - c ] However, E p c π = 0 thus P = [ - c ] (4) p 5
17 However, coinsurance and franchise contracts are available at the same premium. We obtain: P = with f c ( p + ) + (- ( ) = c p f ( )) [ c - c( ) + p c p c ] = [ c - c ] p. Appendix 4 The Arrow theorem holds only if '( 0) ( 0) V 0. V ' = c p [ (W0 - P - c ), H0 - D + ) - (W [V (W 0 - P - ( c, H 0 - D + ) - V (W 0 - P P - - c, H 0 - D + )] c, H 0 - D + )]ν (7) REFERENCE - Arrow K. J. (96), ncertainty and the Welfare Economics of Medical Care, American Economic Review 5, Bien F. (00), Assurance maladie et risque moral : une note sur l incidence du type de risqué, Mimeo THEMA niversité Paris X-Nanterre. - Cook P.J. and Graham D.A. (977), The demand for insurance and protection : the case of irreplaceable commodities, Quarterly journal of economics Doherty N. et chlesinger H. (98), A note on risk premium with random initial wealth, Insurance: Mathematics and Economics, 5, Doherty N. and chlesinger H. (98a), Optimal Insurance in incomplete markets, journal of political economy 9: Doherty N. and chlesinger H. (98b), The optimal deductible for an insurance policy when initial wealth is random, Journal of Business 56, Doherty N. and chlesinger H. (990), Rational insurance purchasing: consideration of contract nonperformance, Quarterly journal of economics, 05,
18 - Eeckhoudt. and Hammit J. K. (00), Background risks and the value of a statistical ive, Journal of risk and uncertainty Vol. n: : Eeckhoudt. and Kimball M. (99), Background risk, prudence and the demand for insurance, In:G. Dionne (ed.), (99), Contributions to Insurance Economics, Kluwer Academic Publishers, Evans W.N. and W.K. Viscusi (99), "Estimation of state dependent utility function using survey data ", Review of economics and statistics, 7, Flochel. and B. Rey (00), " Health care demand and health insurance", Mimeo GATE - Mossin J. (968), "Aspects of rational insurance purchasing", journal of political economy 76: Razgallah M.A. (004), "Demande de soins curatifs, auto-protection et auto-asssurance", Mimeo GATE. - Rey B. (00), A Note on Optimal Insurance in the presence of a Nonpecuniary Background Risk, Theory and Decision Vol. 54 n:. - mith V. (968), "Optimal Coverage", Journal of Political Economy 76:
MORAL HAZARD AND BACKGROUND RISK IN COMPETITIVE INSURANCE MARKETS: THE DISCRETE EFFORT CASE. James A. Ligon * University of Alabama.
mhbri-discrete 7/5/06 MORAL HAZARD AND BACKGROUND RISK IN COMPETITIVE INSURANCE MARKETS: THE DISCRETE EFFORT CASE James A. Ligon * University of Alabama and Paul D. Thistle University of Nevada Las Vegas
More informationLiability, Insurance and the Incentive to Obtain Information About Risk. Vickie Bajtelsmit * Colorado State University
\ins\liab\liabinfo.v3d 12-05-08 Liability, Insurance and the Incentive to Obtain Information About Risk Vickie Bajtelsmit * Colorado State University Paul Thistle University of Nevada Las Vegas December
More informationA note on health insurance under ex post moral hazard
A note on health insurance under ex post moral hazard Pierre Picard To cite this version: Pierre Picard. A note on health insurance under ex post moral hazard. 2016. HAL Id: hal-01353597
More informationBACKGROUND RISK IN THE PRINCIPAL-AGENT MODEL. James A. Ligon * University of Alabama. and. Paul D. Thistle University of Nevada Las Vegas
mhbr\brpam.v10d 7-17-07 BACKGROUND RISK IN THE PRINCIPAL-AGENT MODEL James A. Ligon * University of Alabama and Paul D. Thistle University of Nevada Las Vegas Thistle s research was supported by a grant
More informationSTX FACULTY WORKING PAPER NO Risk Aversion and the Purchase of Risky Insurance. Harris Schlesinger
STX FACULTY WORKING PAPER NO. 1348 *P«F?VOFTH Risk Aversion and the Purchase of Risky Insurance Harris Schlesinger J. -Matthias Graf v. d. Schulenberg College of Commerce and Business Administration Bureau
More informationOptimal Tax Base with Administrative fixed Costs
Optimal Tax Base with Administrative fixed osts Stéphane Gauthier To cite this version: Stéphane Gauthier. Optimal Tax Base with Administrative fixed osts. Documents de travail du entre d Economie de la
More informationStandard Risk Aversion and Efficient Risk Sharing
MPRA Munich Personal RePEc Archive Standard Risk Aversion and Efficient Risk Sharing Richard M. H. Suen University of Leicester 29 March 2018 Online at https://mpra.ub.uni-muenchen.de/86499/ MPRA Paper
More informationA Theory of Regret and Information
A Theory of Regret and Information Emmanuelle GABILLON GREThA, CNRS, UMR 53 Université de Bordeaux Emmanuelle.gabillon@u-bordeaux4.fr Cahiers du GREThA n 20-5 GRETHA UMR CNRS 53 Université Montesquieu
More informationThe relevance and the limits of the Arrow-Lind Theorem. Luc Baumstark University of Lyon. Christian Gollier Toulouse School of Economics.
The relevance and the limits of the Arrow-Lind Theorem Luc Baumstark University of Lyon Christian Gollier Toulouse School of Economics July 2013 1. Introduction When an investment project yields socio-economic
More informationAcademic Editor: Emiliano A. Valdez, Albert Cohen and Nick Costanzino
Risks 2015, 3, 543-552; doi:10.3390/risks3040543 Article Production Flexibility and Hedging OPEN ACCESS risks ISSN 2227-9091 www.mdpi.com/journal/risks Georges Dionne 1, * and Marc Santugini 2 1 Department
More informationECON FINANCIAL ECONOMICS
ECON 337901 FINANCIAL ECONOMICS Peter Ireland Boston College Spring 2018 These lecture notes by Peter Ireland are licensed under a Creative Commons Attribution-NonCommerical-ShareAlike 4.0 International
More informationMossin s Theorem for Upper-Limit Insurance Policies
Mossin s Theorem for Upper-Limit Insurance Policies Harris Schlesinger Department of Finance, University of Alabama, USA Center of Finance & Econometrics, University of Konstanz, Germany E-mail: hschlesi@cba.ua.edu
More informationThe Probationary Period as a Screening Device: The Monopolistic Insurer
THE GENEVA RISK AND INSURANCE REVIEW, 30: 5 14, 2005 c 2005 The Geneva Association The Probationary Period as a Screening Device: The Monopolistic Insurer JAAP SPREEUW Cass Business School, Faculty of
More informationCorrelation Aversion and Insurance Demand
Correlation Aversion and Insurance Demand Abstract This study deals with decision problems under two-dimensional risk. This can be interpreted as risk on income and health. Hence, we have presented a basic
More informationProblem Set 2. Theory of Banking - Academic Year Maria Bachelet March 2, 2017
Problem Set Theory of Banking - Academic Year 06-7 Maria Bachelet maria.jua.bachelet@gmai.com March, 07 Exercise Consider an agency relationship in which the principal contracts the agent, whose effort
More informationPrecautionary Insurance Demand with State-Dependent. Background Risk
Precautionary Insurance Demand with State-Dependent Background Risk Wenan Fei, University of Alabama and Hartford Insurance Harris Schlesinger, University of Alabama and University of Konstanz June 21,
More informationAnswer: Let y 2 denote rm 2 s output of food and L 2 denote rm 2 s labor input (so
The Ohio State University Department of Economics Econ 805 Extra Problems on Production and Uncertainty: Questions and Answers Winter 003 Prof. Peck () In the following economy, there are two consumers,
More informationEffects of Wealth and Its Distribution on the Moral Hazard Problem
Effects of Wealth and Its Distribution on the Moral Hazard Problem Jin Yong Jung We analyze how the wealth of an agent and its distribution affect the profit of the principal by considering the simple
More informationElasticity of risk aversion and international trade
Department of Economics Working Paper No. 0510 http://nt2.fas.nus.edu.sg/ecs/pub/wp/wp0510.pdf Elasticity of risk aversion and international trade by Udo Broll, Jack E. Wahl and Wing-Keung Wong 2005 Udo
More informationInflation Risk, Hedging, and Exports
Review of Development Economics, 5(3), 355 362, 2001 Inflation Risk, Hedging, and Exports Harald L. Battermann and Udo Broll* Abstract This paper analyzes optimal production and hedging decisions of a
More informationCitation Economic Modelling, 2014, v. 36, p
Title Regret theory and the competitive firm Author(s) Wong, KP Citation Economic Modelling, 2014, v. 36, p. 172-175 Issued Date 2014 URL http://hdl.handle.net/10722/192500 Rights NOTICE: this is the author
More informationDepartment of Economics The Ohio State University Final Exam Questions and Answers Econ 8712
Prof. Peck Fall 016 Department of Economics The Ohio State University Final Exam Questions and Answers Econ 871 1. (35 points) The following economy has one consumer, two firms, and four goods. Goods 1
More informationBackground Risk, Demand for Insurance, and Choquet Expected Utility Preferences
The Geneva Papers on Risk and Insurance Theory, 25: 7 28 (2000) c 2000 The Geneva Association Background Risk, Demand for Insurance, and oquet Expected Utility Preferences MEGLENA JELEVA Centre de Recherche
More informationECON 581. Decision making under risk. Instructor: Dmytro Hryshko
ECON 581. Decision making under risk Instructor: Dmytro Hryshko 1 / 36 Outline Expected utility Risk aversion Certainty equivalence and risk premium The canonical portfolio allocation problem 2 / 36 Suggested
More informationSlides III - Complete Markets
Slides III - Complete Markets Julio Garín University of Georgia Macroeconomic Theory II (Ph.D.) Spring 2017 Macroeconomic Theory II Slides III - Complete Markets Spring 2017 1 / 33 Outline 1. Risk, Uncertainty,
More informationForward Dynamic Utility
Forward Dynamic Utility El Karoui Nicole & M RAD Mohamed UnivParis VI / École Polytechnique,CMAP elkaroui@cmapx.polytechnique.fr with the financial support of the "Fondation du Risque" and the Fédération
More informationExport and Hedging Decisions under Correlated. Revenue and Exchange Rate Risk
Export and Hedging Decisions under Correlated Revenue and Exchange Rate Risk Kit Pong WONG University of Hong Kong February 2012 Abstract This paper examines the behavior of a competitive exporting firm
More informationReinsurance Contracting with Adverse Selection and Moral Hazard: Theory and Evidence
Georgia State University ScholarWorks @ Georgia State University Risk Management and Insurance Dissertations Department of Risk Management and Insurance 9-3-2009 Reinsurance Contracting with Adverse Selection
More informationThe Theory of Insurance Demand
Revised, in G. Dionne, Handbook of Insurance February 01 The Theory of Insurance Demand by Harris Schlesinger, University of Alabama Abstract: This chapter presents the basic theoretical model of insurance
More informationSection 9, Chapter 2 Moral Hazard and Insurance
September 24 additional problems due Tuesday, Sept. 29: p. 194: 1, 2, 3 0.0.12 Section 9, Chapter 2 Moral Hazard and Insurance Section 9.1 is a lengthy and fact-filled discussion of issues of information
More informationDrug launch timing and international reference pricing
Drug launch timing and international reference pricing Nicolas Houy, Izabela Jelovac To cite this version: Nicolas Houy, Izabela Jelovac. Drug launch timing and international reference pricing. Working
More informationPrevention in Insurance Markets 1
ANNALES D ÉCONOMIE ET DE STATISTIQUE. N 82 2006 Prevention in Insurance Markets 1 Marie-Cécile FAGART*, Bidénam KAMBIA-CHOPIN** ABSTRACT. This paper considers a competitive insurance market under moral
More informationAuctions That Implement Efficient Investments
Auctions That Implement Efficient Investments Kentaro Tomoeda October 31, 215 Abstract This article analyzes the implementability of efficient investments for two commonly used mechanisms in single-item
More informationRisk-Taking Behavior with Limited Liability and Risk Aversion
Financial Institutions Center Risk-Taking Behavior with Limited Liability and Risk Aversion by Christian Gollier Pierre-François Koehl Jean-Charles Rochet 96-13 THE WHARTON FINANCIAL INSTITUTIONS CENTER
More informationThe Spillover Effect of Compulsory Insurance
The Geneva Papers on Risk and Insurance Theory, 19:23-34 (1994) 91994 The Geneva Association The Spillover Effect of Compulsory Insurance CHRISTIAN GOLLIER GREMAQ and IDEI, University of Toulouse, and
More informationFinancial Economics: Risk Aversion and Investment Decisions
Financial Economics: Risk Aversion and Investment Decisions Shuoxun Hellen Zhang WISE & SOE XIAMEN UNIVERSITY March, 2015 1 / 50 Outline Risk Aversion and Portfolio Allocation Portfolios, Risk Aversion,
More informationUnraveling versus Unraveling: A Memo on Competitive Equilibriums and Trade in Insurance Markets
Unraveling versus Unraveling: A Memo on Competitive Equilibriums and Trade in Insurance Markets Nathaniel Hendren October, 2013 Abstract Both Akerlof (1970) and Rothschild and Stiglitz (1976) show that
More informationWhy do French firms hold cash? Pourquoi les entreprises françaises détiennent-elles de la trésorerie?
Khaoula SADDOUR DRM - Cereg, CNRS UMR7088 Université Paris Dauphine (May 2006) Abstract: This paper investigates the determinants of the cash holdings of French firms over the period 1998-2002, using the
More informationEU i (x i ) = p(s)u i (x i (s)),
Abstract. Agents increase their expected utility by using statecontingent transfers to share risk; many institutions seem to play an important role in permitting such transfers. If agents are suitably
More informationUSING PARTICIPATING AND FINANCIAL CONTRACTS TO INSURE CATASTROPHE
USING PARTICIPATING AND FINANCIAL CONTRACTS TO INSURE CATASTROPHE RISK: IMPLICATIONS FOR CROP RISK MANAGEMENT GEOFFROY ENJOLRAS, ROBERT KAST LAMETA INRA, University of Montpellier, France enjolras@supagro.inra.fr
More informationEconS Micro Theory I Recitation #8b - Uncertainty II
EconS 50 - Micro Theory I Recitation #8b - Uncertainty II. Exercise 6.E.: The purpose of this exercise is to show that preferences may not be transitive in the presence of regret. Let there be S states
More informationIS TAX SHARING OPTIMAL? AN ANALYSIS IN A PRINCIPAL-AGENT FRAMEWORK
IS TAX SHARING OPTIMAL? AN ANALYSIS IN A PRINCIPAL-AGENT FRAMEWORK BARNALI GUPTA AND CHRISTELLE VIAUROUX ABSTRACT. We study the effects of a statutory wage tax sharing rule in a principal - agent framework
More informationA Note on Health Insurance under Ex Post Moral Hazard
risks Article A Note on Health Insurance under Ex Post Moral Hazard Pierre Picard Department of Economics, Ecole Polytechnique, 91128 Palaiseau Cedex, France; pierre.picard@polytechnique.edu Academic Editor:
More informationCitation for published version (APA): Oosterhof, C. M. (2006). Essays on corporate risk management and optimal hedging s.n.
University of Groningen Essays on corporate risk management and optimal hedging Oosterhof, Casper Martijn IMPORTANT NOTE: You are advised to consult the publisher's version (publisher's PDF) if you wish
More informationWAGES, EMPLOYMENT AND FUTURES MARKETS. Ariane Breitfelder. Udo Broll. Kit Pong Wong
WAGES, EMPLOYMENT AND FUTURES MARKETS Ariane Breitfelder Department of Economics, University of Munich, Ludwigstr. 28, D-80539 München, Germany; e-mail: ariane.breitfelder@lrz.uni-muenchen.de Udo Broll
More informationAdvanced Financial Economics Homework 2 Due on April 14th before class
Advanced Financial Economics Homework 2 Due on April 14th before class March 30, 2015 1. (20 points) An agent has Y 0 = 1 to invest. On the market two financial assets exist. The first one is riskless.
More informationA Note on the Relation between Risk Aversion, Intertemporal Substitution and Timing of the Resolution of Uncertainty
ANNALS OF ECONOMICS AND FINANCE 2, 251 256 (2006) A Note on the Relation between Risk Aversion, Intertemporal Substitution and Timing of the Resolution of Uncertainty Johanna Etner GAINS, Université du
More informationmarket opportunity line fair odds line Example 6.6, p. 120.
September 5 The market opportunity line depicts in the plane the different combinations of outcomes and that are available to the individual at the prevailing market prices, depending on how much of an
More informationA note on strategic piracy in the economics of software: an explanation by learning costs
A note on strategic piracy in the economics of software: an explanation by learning costs Bruno Chaves and Frédéric Deroian, FORUM 1 Abstract: In a two-period model, a monopoly sells a software, the use
More informationThe impact of commitment on nonrenewable resources management with asymmetric information on costs
The impact of commitment on nonrenewable resources management with asymmetric information on costs Julie Ing To cite this version: Julie Ing. The impact of commitment on nonrenewable resources management
More informationInsurance and Monopoly Power in a Mixed Private/Public Hospital System. Donald J. Wright
Insurance and Monopoly Power in a Mixed Private/Public Hospital System Donald J. Wright December 2004 Abstract Consumers, when ill, often have the choice of being treated for free in a public hospital
More informationThe Production of Goods in Excess of Demand: A Generalization of Self-Protection
The Geneva Papers on Risk and Insurance Theory, 35: 51 63 (2) c 2 The Geneva Association The Production of Goods in Excess of emand: A Generalization of Self-Protection CAROLE HARITCHABALET GREMAQ UMR
More informationHedonic Equilibrium. December 1, 2011
Hedonic Equilibrium December 1, 2011 Goods have characteristics Z R K sellers characteristics X R m buyers characteristics Y R n each seller produces one unit with some quality, each buyer wants to buy
More informationMistakes, Negligence and Liabilty. Vickie Bajtelsmit * Colorado State University. Paul Thistle University of Nevada Las Vegas.
\ins\liab\mistakes.v1a 11-03-09 Mistakes, Negligence and Liabilty Vickie Bajtelsmit * Colorado State University Paul Thistle University of Nevada Las Vegas November, 2009 Thistle would like to thank Lorne
More informationPORTFOLIO OPTIMIZATION AND SHARPE RATIO BASED ON COPULA APPROACH
VOLUME 6, 01 PORTFOLIO OPTIMIZATION AND SHARPE RATIO BASED ON COPULA APPROACH Mária Bohdalová I, Michal Gregu II Comenius University in Bratislava, Slovakia In this paper we will discuss the allocation
More informationKIER DISCUSSION PAPER SERIES
KIER DISCUSSION PAPER SERIES KYOTO INSTITUTE OF ECONOMIC RESEARCH http://www.kier.kyoto-u.ac.jp/index.html Discussion Paper No. 657 The Buy Price in Auctions with Discrete Type Distributions Yusuke Inami
More informationGeneral Equilibrium under Uncertainty
General Equilibrium under Uncertainty The Arrow-Debreu Model General Idea: this model is formally identical to the GE model commodities are interpreted as contingent commodities (commodities are contingent
More informationRisk Management Determinants Affecting Firms' Values in the Gold Mining Industry: New Empirical Results
Risk Management Determinants Affecting Firms' Values in the Gold Mining Industry: New Empirical Results by Georges Dionne* and Martin Garand Risk Management Chair, HEC Montreal * Corresponding author:
More informationLoss-leader pricing and upgrades
Loss-leader pricing and upgrades Younghwan In and Julian Wright This version: August 2013 Abstract A new theory of loss-leader pricing is provided in which firms advertise low below cost) prices for certain
More informationDepartment of Economics The Ohio State University Final Exam Answers Econ 8712
Department of Economics The Ohio State University Final Exam Answers Econ 8712 Prof. Peck Fall 2015 1. (5 points) The following economy has two consumers, two firms, and two goods. Good 2 is leisure/labor.
More informationOn the 'Lock-In' Effects of Capital Gains Taxation
May 1, 1997 On the 'Lock-In' Effects of Capital Gains Taxation Yoshitsugu Kanemoto 1 Faculty of Economics, University of Tokyo 7-3-1 Hongo, Bunkyo-ku, Tokyo 113 Japan Abstract The most important drawback
More informationUberrimae Fidei and Adverse Selection: the equitable legal judgment of Insurance Contracts
MPRA Munich Personal RePEc Archive Uberrimae Fidei and Adverse Selection: the equitable legal judgment of Insurance Contracts Jason David Strauss North American Graduate Students 2 October 2008 Online
More informationCEREC, Facultés universitaires Saint Louis. Abstract
Equilibrium payoffs in a Bertrand Edgeworth model with product differentiation Nicolas Boccard University of Girona Xavier Wauthy CEREC, Facultés universitaires Saint Louis Abstract In this note, we consider
More informationFirst-Order (Conditional) Risk Aversion, Backround Risk and Risk Diversification
First-Order (Conditional) Risk Aversion, Backround Risk and Risk Diversification Georges Dionne Jingyuan Li April 2011 Bureaux de Montréal : Bureaux de Québec : Université de Montréal Université Laval
More informationSome Simple Analytics of the Taxation of Banks as Corporations
Some Simple Analytics of the Taxation of Banks as Corporations Timothy J. Goodspeed Hunter College and CUNY Graduate Center timothy.goodspeed@hunter.cuny.edu November 9, 2014 Abstract: Taxation of the
More informationArrow s theorem of the deductible: moral hazard and stop-loss in health insurance
Arrow s theorem of the deductible: moral hazard and stop-loss in health insurance Jacques H. Drèze a and Erik Schokkaert a,b a CORE, Université catholique de Louvain b Department of Economics, KU Leuven
More informationAndreas Wagener University of Vienna. Abstract
Linear risk tolerance and mean variance preferences Andreas Wagener University of Vienna Abstract We translate the property of linear risk tolerance (hyperbolical Arrow Pratt index of risk aversion) from
More informationConsumer Theory. The consumer s problem: budget set, interior and corner solutions.
Consumer Theory The consumer s problem: budget set, interior and corner solutions. 1 The consumer s problem The consumer chooses the consumption bundle that maximizes his welfare (that is, his utility)
More informationFeedback Effect and Capital Structure
Feedback Effect and Capital Structure Minh Vo Metropolitan State University Abstract This paper develops a model of financing with informational feedback effect that jointly determines a firm s capital
More informationWage bargaining with non-stationary preferences under strike decision
Wage bargaining with non-stationary preferences under strike decision Ahmet Ozkardas, Agnieszka Rusinowska To cite this version: Ahmet Ozkardas, Agnieszka Rusinowska. Wage bargaining with non-stationary
More informationDEPARTMENT OF ECONOMICS DISCUSSION PAPER SERIES
ISSN 1471-0498 DEPARTMENT OF ECONOMICS DISCUSSION PAPER SERIES HOUSING AND RELATIVE RISK AVERSION Francesco Zanetti Number 693 January 2014 Manor Road Building, Manor Road, Oxford OX1 3UQ Housing and Relative
More informationMechanisms for House Allocation with Existing Tenants under Dichotomous Preferences
Mechanisms for House Allocation with Existing Tenants under Dichotomous Preferences Haris Aziz Data61 and UNSW, Sydney, Australia Phone: +61-294905909 Abstract We consider house allocation with existing
More informationSequential Investment, Hold-up, and Strategic Delay
Sequential Investment, Hold-up, and Strategic Delay Juyan Zhang and Yi Zhang February 20, 2011 Abstract We investigate hold-up in the case of both simultaneous and sequential investment. We show that if
More informationSequential Investment, Hold-up, and Strategic Delay
Sequential Investment, Hold-up, and Strategic Delay Juyan Zhang and Yi Zhang December 20, 2010 Abstract We investigate hold-up with simultaneous and sequential investment. We show that if the encouragement
More informationAdverse Selection When Agents Envy Their Principal. KANGSIK CHOI June 7, 2004
THE INSTITUTE OF ECONOMIC RESEARCH Working Paper Series No. 92 Adverse Selection When Agents Envy Their Principal KANGSIK CHOI June 7, 2004 KAGAWA UNIVERSITY Takamatsu, Kagawa 760-8523 JAPAN Adverse Selection
More informationLegal Errors and Liability Insurance. Vickie Bajtelsmit Colorado State University. and. Paul D. Thistle * University of Nevada Las Vegas
leli.v5 05-02-08 Legal Errors and Liability Insurance Vickie Bajtelsmit Colorado State University and Paul D. Thistle * University of Nevada Las Vegas An earlier version of this paper was presented at
More informationPortfolio Selection with Quadratic Utility Revisited
The Geneva Papers on Risk and Insurance Theory, 29: 137 144, 2004 c 2004 The Geneva Association Portfolio Selection with Quadratic Utility Revisited TIMOTHY MATHEWS tmathews@csun.edu Department of Economics,
More informationPrudence, risk measures and the Optimized Certainty Equivalent: a note
Working Paper Series Department of Economics University of Verona Prudence, risk measures and the Optimized Certainty Equivalent: a note Louis Raymond Eeckhoudt, Elisa Pagani, Emanuela Rosazza Gianin WP
More informationA Preference Foundation for Fehr and Schmidt s Model. of Inequity Aversion 1
A Preference Foundation for Fehr and Schmidt s Model of Inequity Aversion 1 Kirsten I.M. Rohde 2 January 12, 2009 1 The author would like to thank Itzhak Gilboa, Ingrid M.T. Rohde, Klaus M. Schmidt, and
More informationApplication of large deviation methods to the pricing of index options in finance. Méthodes de grandes déviations et pricing d options sur indice
Application of large deviation methods to the pricing of index options in finance Méthodes de grandes déviations et pricing d options sur indice Marco Avellaneda 1, Dash Boyer-Olson 1, Jérôme Busca 2,
More informationIntroduction to game theory LECTURE 2
Introduction to game theory LECTURE 2 Jörgen Weibull February 4, 2010 Two topics today: 1. Existence of Nash equilibria (Lecture notes Chapter 10 and Appendix A) 2. Relations between equilibrium and rationality
More informationA new model of mergers and innovation
WP-2018-009 A new model of mergers and innovation Piuli Roy Chowdhury Indira Gandhi Institute of Development Research, Mumbai March 2018 A new model of mergers and innovation Piuli Roy Chowdhury Email(corresponding
More informationA unified framework for optimal taxation with undiversifiable risk
ADEMU WORKING PAPER SERIES A unified framework for optimal taxation with undiversifiable risk Vasia Panousi Catarina Reis April 27 WP 27/64 www.ademu-project.eu/publications/working-papers Abstract This
More informationDepartment of Economics The Ohio State University Midterm Questions and Answers Econ 8712
Prof. James Peck Fall 06 Department of Economics The Ohio State University Midterm Questions and Answers Econ 87. (30 points) A decision maker (DM) is a von Neumann-Morgenstern expected utility maximizer.
More informationTopics in Contract Theory Lecture 5. Property Rights Theory. The key question we are staring from is: What are ownership/property rights?
Leonardo Felli 15 January, 2002 Topics in Contract Theory Lecture 5 Property Rights Theory The key question we are staring from is: What are ownership/property rights? For an answer we need to distinguish
More informationJEFF MACKIE-MASON. x is a random variable with prior distrib known to both principal and agent, and the distribution depends on agent effort e
BASE (SYMMETRIC INFORMATION) MODEL FOR CONTRACT THEORY JEFF MACKIE-MASON 1. Preliminaries Principal and agent enter a relationship. Assume: They have access to the same information (including agent effort)
More informationMicro Theory I Assignment #5 - Answer key
Micro Theory I Assignment #5 - Answer key 1. Exercises from MWG (Chapter 6): (a) Exercise 6.B.1 from MWG: Show that if the preferences % over L satisfy the independence axiom, then for all 2 (0; 1) and
More informationMidterm 1, Financial Economics February 15, 2010
Midterm 1, Financial Economics February 15, 2010 Name: Email: @illinois.edu All questions must be answered on this test form. Question 1: Let S={s1,,s11} be the set of states. Suppose that at t=0 the state
More informationOn Monopoly Insurance Pricing when Agents Differ in Risk Aversion
On Monopoly Insurance Pricing when Agents Differ in Risk Aversion Annette Hofmann, 1 Martin Nell, 2 and Philipp Pohl 3 Abstract: The paper analyzes a monopolistic insurer s pricing strategies when potential
More informationMicroeconomics of Banking: Lecture 2
Microeconomics of Banking: Lecture 2 Prof. Ronaldo CARPIO September 25, 2015 A Brief Look at General Equilibrium Asset Pricing Last week, we saw a general equilibrium model in which banks were irrelevant.
More informationOverall Excess Burden Minimization from a Mathematical Perspective Kong JUN 1,a,*
016 3 rd International Conference on Social Science (ICSS 016 ISBN: 978-1-60595-410-3 Overall Excess Burden Minimization from a Mathematical Perspective Kong JUN 1,a,* 1 Department of Public Finance and
More informationECO 317 Economics of Uncertainty Fall Term 2009 Notes for lectures 9. Demand for Insurance
The Basic Two-State Model ECO 317 Economics of Uncertainty Fall Term 2009 Notes for lectures 9. Demand for Insurance Insurance is a method for reducing (or in ideal circumstances even eliminating) individual
More informationWORKING PAPER SERIES 2011-ECO-05
October 2011 WORKING PAPER SERIES 2011-ECO-05 Even (mixed) risk lovers are prudent David Crainich CNRS-LEM and IESEG School of Management Louis Eeckhoudt IESEG School of Management (LEM-CNRS) and CORE
More informationA Newsvendor Model with Initial Inventory and Two Salvage Opportunities
A Newsvendor Model with Initial Inventory and Two Salvage Opportunities Ali CHEAITOU Euromed Management Marseille, 13288, France Christian VAN DELFT HEC School of Management, Paris (GREGHEC) Jouys-en-Josas,
More informationOPTIMAL INCENTIVES IN A PRINCIPAL-AGENT MODEL WITH ENDOGENOUS TECHNOLOGY. WP-EMS Working Papers Series in Economics, Mathematics and Statistics
ISSN 974-40 (on line edition) ISSN 594-7645 (print edition) WP-EMS Working Papers Series in Economics, Mathematics and Statistics OPTIMAL INCENTIVES IN A PRINCIPAL-AGENT MODEL WITH ENDOGENOUS TECHNOLOGY
More informationA Newsvendor Model with Initial Inventory and Two Salvage Opportunities
A Newsvendor Model with Initial Inventory and Two Salvage Opportunities Ali Cheaitou Euromed Management Domaine de Luminy BP 921, 13288 Marseille Cedex 9, France Fax +33() 491 827 983 E-mail: ali.cheaitou@euromed-management.com
More information2. A DIAGRAMMATIC APPROACH TO THE OPTIMAL LEVEL OF PUBLIC INPUTS
2. A DIAGRAMMATIC APPROACH TO THE OPTIMAL LEVEL OF PUBLIC INPUTS JEL Classification: H21,H3,H41,H43 Keywords: Second best, excess burden, public input. Remarks 1. A version of this chapter has been accepted
More informationDepartment of Economics The Ohio State University Final Exam Answers Econ 8712
Department of Economics The Ohio State University Final Exam Answers Econ 872 Prof. Peck Fall 207. (35 points) The following economy has three consumers, one firm, and four goods. Good is the labor/leisure
More informationExplaining Insurance Policy Provisions via Adverse Selection
The Geneva Papers on Risk and Insurance Theory, 22: 121 134 (1997) c 1997 The Geneva Association Explaining Insurance Policy Provisions via Adverse Selection VIRGINIA R. YOUNG AND MARK J. BROWNE School
More informationRisk Management Determinants Affecting Firms' Values in the Gold Mining Industry: New Empirical Results
Risk Management Determinants Affecting Firms' Values in the Gold Mining Industry: New Empirical Results by Georges Dionne* and Martin Garand Risk Management Chair, HEC Montreal * Corresponding author:
More information