Monopoly Insurance and Endogenous Information

Research output: Contribution to journal › Journal article › Research › peer-review

Standard

Monopoly Insurance and Endogenous Information. / Lagerlöf, Johan N. M.; Schottmüller, Christoph.

In: International Economic Review, Vol. 59, No. 1, 29.01.2018, p. 233-255.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Lagerlöf, JNM & Schottmüller, C 2018, 'Monopoly Insurance and Endogenous Information', International Economic Review, vol. 59, no. 1, pp. 233-255. https://doi.org/10.1111/iere.12268

APA

Lagerlöf, J. N. M., & Schottmüller, C. (2018). Monopoly Insurance and Endogenous Information. International Economic Review, 59(1), 233-255. https://doi.org/10.1111/iere.12268

Vancouver

Lagerlöf JNM, Schottmüller C. Monopoly Insurance and Endogenous Information. International Economic Review. 2018 Jan 29;59(1):233-255. https://doi.org/10.1111/iere.12268

Author

Lagerlöf, Johan N. M. ; Schottmüller, Christoph. / Monopoly Insurance and Endogenous Information. In: International Economic Review. 2018 ; Vol. 59, No. 1. pp. 233-255.

Bibtex

@article{a9c9cd8bc7694a29b1f7d27c2e39193f,
title = "Monopoly Insurance and Endogenous Information",
abstract = "We study a monopoly insurance model with endogenous information acquisi-tion. Through a continuous effort choice, consumers can determine the precision of a privately observed signal that is informative about their accident risk. The equilibrium effort is, depending on parameter values, either zero (implying symmetric information) or positive (implying privately informed consumers). Regardless of the nature of the equilibrium, all offered contracts, also at the top, involve underinsurance, which discourages information gathering. We identify a missorting effect that explains why the insurer wants to discourage information acquisition. Moreover, lower information gathering costs can hurt both consumer and insurer.",
author = "Lagerl{\"o}f, {Johan N. M.} and Christoph Schottm{\"u}ller",
year = "2018",
month = jan,
day = "29",
doi = "10.1111/iere.12268",
language = "English",
volume = "59",
pages = "233--255",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "Wiley-Blackwell",
number = "1",

}

RIS

TY - JOUR

T1 - Monopoly Insurance and Endogenous Information

AU - Lagerlöf, Johan N. M.

AU - Schottmüller, Christoph

PY - 2018/1/29

Y1 - 2018/1/29

N2 - We study a monopoly insurance model with endogenous information acquisi-tion. Through a continuous effort choice, consumers can determine the precision of a privately observed signal that is informative about their accident risk. The equilibrium effort is, depending on parameter values, either zero (implying symmetric information) or positive (implying privately informed consumers). Regardless of the nature of the equilibrium, all offered contracts, also at the top, involve underinsurance, which discourages information gathering. We identify a missorting effect that explains why the insurer wants to discourage information acquisition. Moreover, lower information gathering costs can hurt both consumer and insurer.

AB - We study a monopoly insurance model with endogenous information acquisi-tion. Through a continuous effort choice, consumers can determine the precision of a privately observed signal that is informative about their accident risk. The equilibrium effort is, depending on parameter values, either zero (implying symmetric information) or positive (implying privately informed consumers). Regardless of the nature of the equilibrium, all offered contracts, also at the top, involve underinsurance, which discourages information gathering. We identify a missorting effect that explains why the insurer wants to discourage information acquisition. Moreover, lower information gathering costs can hurt both consumer and insurer.

U2 - 10.1111/iere.12268

DO - 10.1111/iere.12268

M3 - Journal article

VL - 59

SP - 233

EP - 255

JO - International Economic Review

JF - International Economic Review

SN - 0020-6598

IS - 1

ER -

ID: 222753210