Nash Equilibrium in Competitive Insurance
9 Pages Posted: 30 Sep 2015 Last revised: 7 Jan 2017
Date Written: December 16, 2016
I formalise a rather stylised insurance market with adverse selection as a standard duopoly. I formally specify demand functions and profits and I prove that a Nash equilibrium in pure strategies exists if and only if the well-known Rothschild-Stiglitz allocation is efficient.
Keywords: Insurance, Adverse Selection, Duopoly, Contracts, Nash Equilibrium
JEL Classification: C62, C72, D86, L13
Suggested Citation: Suggested Citation