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Title: A theory of the demand for underwriting
Authors: Kamiya, Shinichi
Browne, Mark J.
Keywords: DRNTU::Business::Finance::Insurance policies
Issue Date: 2012
Source: Browne, M. J., & Kamiya, S. (2012). A theory of the demand for underwriting. Journal of risk and insurance, 79(2), 335-349.
Series/Report no.: Journal of risk and insurance
Abstract: We examine the demand for underwriting and its effect on equilibrium in an insurance market in which insureds know their risk type, but insurers do not. Our analysis indicates that a set of policies including one that requires buyers to take an underwriting test can constitute a full coverage Nash equilibrium when perfect classification is possible. We also find that underwriting equilibria, in which low risks obtain greater coverage than they would without underwriting, widely exist in a Wilsonian market with nonmyopic insurers. Our findings provide a potential explanation for why empirical evidence on adverse selection is mixed.
ISSN: 0022-4367
DOI: 10.1111/j.1539-6975.2011.01436.x
Fulltext Permission: none
Fulltext Availability: No Fulltext
Appears in Collections:NBS Journal Articles

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