Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/197135
Authors: 
Luz, Vitor Farinha
Year of Publication: 
2017
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 12 [Year:] 2017 [Issue:] 3 [Pages:] 1349-1391
Abstract: 
This paper provides a complete characterization of equilibria in a game-theoretic version of Rothschild and Stiglitz's (1976) model of competitive insurance. I allow for stochastic contract offers by insurance firms and show that a unique symmetric equilibrium always exists. Exact conditions under which the equilibrium involves mixed strategies are provided. The mixed equilibrium features (i) cross-subsidization across risk levels, (ii) dependence of offers on the risk distribution, and (iii) price dispersion generated by firm randomization over offers.
Subjects: 
Asymmetric and private information
mechanism design
oligopoly
economics of contracts
insurance
JEL: 
C72
D43
D82
D86
G22
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by-nc/4.0/
Document Type: 
Article

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