Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25505
Authors: 
Sonnenholzner, Michael
Wambach, Achim
Year of Publication: 
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.
Subjects: 
Insurance
Patience
Adverse Selection
Moral Hazard
JEL: 
D82
G22
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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