Full metadata
Title
Adverse Selection and Nonlinear Pricing in Competitive Insurance Markets
Description
I conduct a two-fold study on the relationship between adverse selection and nonlinear pricing in competitive insurance markets. First, I reassess empirical evidence of adverse selection in life insurance with the Health and Retirement Study (HRS) data used by Cawley and Philipson (1999). Specifically, I evaluate the shape of the premium schedule and present indications of quantity premia beyond a certain coverage level. The observed pricing schedule appears like the "backward-S-shaped" curve described by Chade and Schlee (2012); I discuss why this result cannot be entirely explained by fixed costs of underwriting. Second, I critique the arguments against adverse selection in existing literature by modifying the Rothschild and Stiglitz (1976) model of competitive insurance markets. I present several existing models and a new framework to explain how adverse selection and quantity discounts can coexist in equilibrium. These modifications deviate from the standard models of competitive insurance, but produce plausible hypotheses with conclusions contrary to conventional theoretical results.
Date Created
2017-05
Contributors
- Mahan, Scott Alexander (Author)
- Schlee, Edward (Thesis director)
- Silverman, Daniel (Committee member)
- School of Mathematical and Statistical Sciences (Contributor)
- Economics Program in CLAS (Contributor)
- Barrett, The Honors College (Contributor)
Topical Subject
Resource Type
Extent
25 pages
Language
eng
Copyright Statement
In Copyright
Primary Member of
Series
Academic Year 2016-2017
Handle
https://hdl.handle.net/2286/R.I.43765
Level of coding
minimal
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System Created
- 2017-10-30 02:50:58
System Modified
- 2021-08-11 04:09:57
- 3 years 3 months ago
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