Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/195787 
Year of Publication: 
2017
Citation: 
[Journal:] Risks [ISSN:] 2227-9091 [Volume:] 5 [Issue:] 4 [Publisher:] MDPI [Place:] Basel [Year:] 2017 [Pages:] 1-17
Publisher: 
MDPI, Basel
Abstract: 
In this paper, we investigate the impact of the accident reporting strategy of drivers, within a Bonus-Malus system. We exhibit the induced modification of the corresponding class level transition matrix and derive the optimal reporting strategy for rational drivers. The hunger for bonuses induces optimal thresholds under which, drivers do not claim their losses. Mathematical properties of the induced level class process are studied. A convergent numerical algorithm is provided for computing such thresholds and realistic numerical applications are discussed.
Subjects: 
bonus hunger
bonus-malus
control
incentives
Markov Chains
reporting
Persistent Identifier of the first edition: 
Creative Commons License: 
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Document Type: 
Article
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