We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
CATEGORIZING RISKS IN THE INSURANCE INDUSTRY.
- Authors
Hoy, Michael
- Abstract
This paper analyzes the welfare implications of imperfectly categorizing risks in the insurance industry under conditions of asymmetric information. Firms, initially unable to distinguish the risk type of individuals, are provided with imperfect information concerning risk membership. The paper then compares various Wilson type equilibria to determine the welfare implications of firms imperfectly categorizing risks. It is shown that only in the case where the initial equilibrium is of the Nash no-subsidy type is there a Pareto-type improvement in welfare.
- Subjects
WELFARE economics; ECONOMIC policy; INSURANCE; SUBSIDIES; ECONOMIC equilibrium; BUSINESS enterprises
- Publication
Quarterly Journal of Economics, 1982, Vol 97, Issue 2, p321
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1880761