Advantageous Effects of Regulatory Adverse Selection in The Life Insurance Market  

Oleh:

Polborn, Mattias K. ; Hoy, Michael ; Sadanand, Asha

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 116 no. 508 (2006), page 327-354.
Topik: life insurance; regulatory adverse; life insurance market
Fulltext: 327.pdf (224.09KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.20 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We analyse the effects of regulations prohibiting the use of information to risk - rate premiums in a life insurance market. New information derived from genetic tests is likely to become increasingly relevant in the future. Many governments prohibit the use of this information, thereby generating 'regulatory adverse selection'. In our model, individuals early in their lives know neither their desired level of life insurance later in life nor their mortality risk, but learn both over time. We obtain both positive and normative results that differ qualitatively from those in standard, static models. Legislation prohibiting the use of genetic tests for ratemaking may increase welfare.

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