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Center for Financial Studies (CFS), Universität Frankfurt a. M. >
CFS Working Paper Series, Universität Frankfurt a. M. >
Please use this identifier to cite or link to this item:
http://hdl.handle.net/10419/25523
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| Title: | | Self-protection and insurance with interdependencies  |
| 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. |
| Subjects: | | Externality Mitigation Insurance |
| JEL: | | C72 D62 D80 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CFS Working Paper Series, Universität Frankfurt a. M.
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