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Title:Self-protection and insurance with interdependencies PDF Logo
Authors:Kunreuther, Howard
Muermann, Alexander
Issue Date:2007
Series/Report no.:CFS Working Paper 2007/22
Abstract:We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling “at-fault” insurance can partially internalize this externality and thereby improve individual and social welfare.
Persistent Identifier of the first edition:urn:nbn:de:hebis:30-39822
Document Type:Working Paper
Appears in Collections:CFS Working Paper Series, Universität Frankfurt a. M.

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