Posted: 18 Oct 2010
Date Written: March 2010
We describe recent advances in the empirical analysis of insurance markets. This new research proposes ways to estimate individual demand for insurance and the relationship between prices and insurer costs in the presence of adverse and advantageous selection. We discuss how these models permit the measurement of welfare distortions arising from asymmetric information and the welfare consequences of potential government policy responses. We also discuss some challenges in modeling imperfect competition between insurers and outline a series of open research questions.
Suggested Citation: Suggested Citation
Einav, Liran and Finkelstein, Amy and Levin, Jonathan, Beyond Testing: Empirical Models of Insurance Markets (March 2010). Annual Review of Economics, Vol. 2, pp. 311-336, 2010. Available at SSRN: https://ssrn.com/abstract=1693011 or http://dx.doi.org/10.1146/annurev.economics.050708.143254