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Title:On the role of patience in an insurance market with asymmetric information PDF Logo
Authors:Sonnenholzner, Michael
Wambach, Achim
Issue Date:2006
Series/Report no.:CFS Working Paper 2007/04
Abstract:We analyse a 2-period competitive insurance market which is characterized by the simultaneous presence of standard moral hazard and adverse selection with regard to consumer time preferences. It is shown that there exists an equilibrium in which patient consumers use high effort and buy a profit-making insurance contract with high coverage, whereas impatient consumers use low effort and buy a contract with low coverage or even remain uninsured. This finding may help to explain why positive profits and the opposite of adverse selection with regard to risk types can sometimes be observed empirically.
Adverse Selection
Moral Hazard
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-38130
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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