Genetic Tests and Inter-Temporal Screening in Competitive Insurance Markets

The B. E. Journal of Economic Analysis & Policy, Forthcoming

18 Pages Posted: 20 Jan 2010

See all articles by Winand Emons

Winand Emons

University of Bern - Department of Economics; Centre for Economic Policy Research (CEPR)

Date Written: January, 19 2010

Abstract

We consider successive generations of non-altruistic individuals carrying either a good or bad gene. Daughters are more likely to inherit their mother's gene. Competitive insurers can perform a genetic test revealing an agent's gene. They can condition their quotes on the agent's or on her ancestors' genetic status. In equilibrium, generation one is bribed to take the test with an unconditional premium. The insurer uses this information to profitably screen a finite number of generations of their offspring. The offspring of good-gene carriers subsidize the tested generation.

Keywords: genetic tests, insurance, screening, pooling

JEL Classification: D82, G22

Suggested Citation

Emons, Winand, Genetic Tests and Inter-Temporal Screening in Competitive Insurance Markets (January, 19 2010). The B. E. Journal of Economic Analysis & Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1538744

Winand Emons (Contact Author)

University of Bern - Department of Economics ( email )

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HOME PAGE: http://staff.vwi.unibe.ch/emons

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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