Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?
Research output: Contribution to journal › Journal article › Research › peer-review
We model a monopoly insurance market where consumers can learn their accident risks at a cost c. We then ask: What are the welfare effects of a policy that reduces c? If c is sufficiently small (c < c*), the optimal contract is such that the consumer gathers information. For c < c*, both insurer and consumer benefit from a policy that reduces c further. For c > c*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is “successful,” meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.
Original language | English |
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Journal | The Scandinavian Journal of Economics |
Volume | 120 |
Issue number | 2 |
Pages (from-to) | 465-502 |
ISSN | 0347-0520 |
DOIs | |
Publication status | Published - 2018 |
- Faculty of Social Sciences - D82, I13
Research areas
ID: 172762817