MUTUAL INSURANCE WITH ASYMMETRIC INFORMATION: THE CASE OF ADVERSE SELECTION - HAL Accéder directement au contenu
Pré-publication, Document de travail Année : 2008

MUTUAL INSURANCE WITH ASYMMETRIC INFORMATION: THE CASE OF ADVERSE SELECTION

Résumé

This paper examines the impact of risk heterogeneity and asymmetric information on mutual risk-sharing agreements. It displays the optimal incentive compatible sharing rule in a simple two-agent model with two levels of risk. When individual risk is public information, equal sharing of wealth is not achievable when risk heterogeneity is too large or when risk aversion is too low. However the mutualization principle still holds as agents only bear aggregate risk. This result no longer holds when risk is private information. Moreover, the asymmetry of information (i) makes equal sharing unsustainable when both individuals are low risk types (ii) induces some exchanges when agents have the same level of initial wealth and (iii) induces changes in the direction of transfer with respect to the complete information benchmark in some states of nature when risk types are independent and absolute risk aversion is decreasing and convex.
Fichier principal
Vignette du fichier
DT2008-11Corrige.pdf ( 342.68 Ko ) Télécharger
Origine : Fichiers produits par l'(les) auteur(s)
Loading...

Dates et versions

halshs-00278178, version 1 (09-05-2008)

Identifiants

  • HAL Id : halshs-00278178 , version 1

Citer

Renaud Bourlès, Dominique Henriet. MUTUAL INSURANCE WITH ASYMMETRIC INFORMATION: THE CASE OF ADVERSE SELECTION. 2008. ⟨halshs-00278178⟩
81 Consultations
111 Téléchargements
Dernière date de mise à jour le 28/04/2024
comment ces indicateurs sont-ils produits

Partager

Gmail Facebook Twitter LinkedIn Plus