Competition between insurers with superior information
Villeneuve, Bertrand (2005), Competition between insurers with superior information, European economic review, 49, 2, p. 321-340. http://dx.doi.org/10.1016/S0014-2921(03)00047-3
TypeArticle accepté pour publication ou publié
Journal nameEuropean economic review
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Abstract (EN)We analyze markets where insurers are better informed about risk than consumers. We show that even competitive markets may result in insufficient information revelation and inefficient insurance coverage. This explains why certain risky consumers remain uninsured and why certain market segments are persistently profitable. We also show robustness to competition in menus or mechanisms. Our analysis of the “contrary of adverse selection” (competition between principals with common value and exclusivity) is suitable for other markets (lawyers, doctors, mechanics, etc.).
Subjects / KeywordsInformed principals; Common value; Competition in mechanisms; Insurance markets; Adverse selection
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