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Preprints, Working Papers, ... Year : 2015

Equilibrium in insurance markets with adverse selection when insurers pay policy dividends

Abstract

We show that an equilibrium always exists in the Rothschild-Stiglitz insurance market model with adverse selection and an arbitrary number of risk types, when insurance contracts include policy dividend rules. The Miyazaki-WilsonSpence state-contingent allocation is an equilibrium allocation, and it is the only one when out-of-equilibrium beliefs satisfy a robustness criterion. It is shown that stock insurers and mutuals may coexist, with stock insurers o⁄ering insurance coverage at actuarial price and mutuals cross-subsidizing risks.
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Dates and versions

hal-01206073 , version 1 (28-09-2015)
hal-01206073 , version 2 (26-09-2016)

Identifiers

  • HAL Id : hal-01206073 , version 1

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Pierre Picard. Equilibrium in insurance markets with adverse selection when insurers pay policy dividends. 2015. ⟨hal-01206073v1⟩
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