Genetic Tests and Intertemporal Screening in Competitive Insurance Markets

18 Pages Posted: 8 Dec 2006 Last revised: 19 Jan 2010

See all articles by Winand Emons

Winand Emons

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

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Date Written: December 7, 2006

Abstract

We consider successive generations of non-altruistic individuals carrying a good or bad gene. Daughters are more likely to carry their mother's gene than the opposite one. Competitive insurers can perform a genetic test revealing an agent's gene. They may 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 quote. 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 Intertemporal Screening in Competitive Insurance Markets (December 7, 2006). Available at SSRN: https://ssrn.com/abstract=950210 or http://dx.doi.org/10.2139/ssrn.950210

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Centre for Economic Policy Research (CEPR)

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