Efficient Competition in Insurance Markets

13 Pages Posted: 30 Sep 2015 Last revised: 8 May 2017

See all articles by Anastasios Dosis

Anastasios Dosis

ESSEC Business School; University of Cergy-Pontoise - THEMA

Date Written: May 7, 2017

Abstract

I construct an efficient game of competition for insurance markets with adverse selection. In the game, each company offers two menus of contracts: a public menu and a private menu. The union of all the public menus needs to be offered by every active company in the market. A private menu concerns only the company that offers it. I show that this simple game reduces the set of profitable deviations to the extent that a pure-strategy equilibrium exists in every market with adverse selection. Furthermore, I characterise general, well-studied environments in which the set of equilibrium allocations coincides with the set of efficient allocations.

Keywords: adverse selection, insurance, competition, existence, efficiency

JEL Classification: D02, D82, D86

Suggested Citation

Dosis, Anastasios, Efficient Competition in Insurance Markets (May 7, 2017). Available at SSRN: https://ssrn.com/abstract=2666964 or http://dx.doi.org/10.2139/ssrn.2666964

Anastasios Dosis (Contact Author)

ESSEC Business School

3 Avenue Bernard Hirsch
B.P 50105
Cergy - Pontoise Cedex, NA 95021
France

University of Cergy-Pontoise - THEMA ( email )

33 boulevard du port
F-95011 Cergy-Pontoise Cedex, 95011
France

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