Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25523
Authors: 
Kunreuther, Howard
Muermann, Alexander
Year of Publication: 
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
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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