Facilitating Consumer Learning in Insurance Markets: What Are the Welfare Effects?
Research output: Contribution to journal › Journal article › Research › peer-review
We model a monopoly insurance market where consumers can learn their accident risks at a cost c. We then ask: What are the welfare effects of a policy that reduces c? If c is sufficiently small (c < c*), the optimal contract is such that the consumer gathers information. For c
c*, marginally reducing c hurts the insurer and weakly benefits the consumer. Finally, a reduction in c that is “successful,” meaning that the consumer gathers information after the reduction but not before it, can hurt both parties.
|Journal||The Scandinavian Journal of Economics|
|Publication status||Published - 2018|
- Faculty of Social Sciences - D82, I13