Advantageous selectionIncreasing aversion to second-stage riskBuilding on the model of insurance contracting with hidden knowledge of risk class introduced by Rothschild and Stiglitz (1976), we assume that insurance applicants fail to reduce compound lotteries. In contrast with the adverse selection ...
Advantageous selection occurs when the agents most eager to buy insurance are also the cheapest ones to insure. Hemenway (1990) links it to differences in risk-aversion among agents, implying different prevention efforts, and finally different riskinesses. We argue that it may also appear when ag...
Hedengren, D., Stratmann, T. Adverse vs. Advantageous Selection in Life Insurance Markets. Working Paper, Accessed from http://ssrn.com/abstract=2194376 (May 1, 2014).Hedengren, D., Stratmann, T., 2012. Adverse vs. advantageous selection in life insurance markets. Working Paper, Accessed ...
We show that expectation-based loss aversion according to Koszegi and Rabin [2006, 2007] provides a natural explanation for advantageous selection in insurance markets for small and modest-scale risks. We offer plausible conditions under which the insurance provider can screen the lowest risk agents ...
HP Laboratories HPL-2011-209 loss aversion; insurance We show that expectation-based loss aversion according to Koszegi and Rabin [2006, 2007] provides a natural explanation for advantageous selection in insurance markets for small and modest-scale risks. We offer plausible conditions under which the...
Some insurance markets are characterized by "advantageous selection'', that is, ex-post risk and coverage are negatively correlated. We show that expectation-based loss aversion as in Koszegi and Rabin (2006, 2007) provides a natural explanation for this phenomenon when agents face modest-scale ...
Advantageous selectionInsuranceRiskSome insurance markets are characterized by "advantageous selection", that is, ex-post risk and coverage are negatively correlated. We show that expectation-based loss aversion as in Kszegi and...doi:10.1007/s11166-017-9269-8Aperjis, Christina...