Genetic Tests and Intertemporal Screening in Competitive Insurance Markets

15 Pages Posted: 28 Jun 2007

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: January 2007

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, pooling, screening

JEL Classification: D82, G22

Suggested Citation

Emons, Winand, Genetic Tests and Intertemporal Screening in Competitive Insurance Markets (January 2007). CEPR Discussion Paper No. 6047, Available at SSRN: https://ssrn.com/abstract=997046

Winand Emons (Contact Author)

University of Bern - Department of Economics ( email )

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Centre for Economic Policy Research (CEPR)

London
United Kingdom

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