A theory of the demand for underwriting
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 e...
| Main Authors: | , |
|---|---|
| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2013
|
| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/99238 http://hdl.handle.net/10220/17189 |
| _version_ | 1826121457404477440 |
|---|---|
| author | Kamiya, Shinichi Browne, Mark J. |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Kamiya, Shinichi Browne, Mark J. |
| author_sort | Kamiya, Shinichi |
| collection | NTU |
| description | 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. |
| first_indexed | 2024-10-01T05:32:38Z |
| format | Journal Article |
| id | ntu-10356/99238 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T05:32:38Z |
| publishDate | 2013 |
| record_format | dspace |
| spelling | ntu-10356/992382023-05-19T06:44:41Z A theory of the demand for underwriting Kamiya, Shinichi Browne, Mark J. Nanyang Business School DRNTU::Business::Finance::Insurance policies 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. 2013-11-01T01:05:04Z 2019-12-06T20:04:57Z 2013-11-01T01:05:04Z 2019-12-06T20:04:57Z 2012 2012 Journal Article Browne, M. J., & Kamiya, S. (2012). A theory of the demand for underwriting. Journal of risk and insurance, 79(2), 335-349. 0022-4367 https://hdl.handle.net/10356/99238 http://hdl.handle.net/10220/17189 10.1111/j.1539-6975.2011.01436.x en Journal of risk and insurance |
| spellingShingle | DRNTU::Business::Finance::Insurance policies Kamiya, Shinichi Browne, Mark J. A theory of the demand for underwriting |
| title | A theory of the demand for underwriting |
| title_full | A theory of the demand for underwriting |
| title_fullStr | A theory of the demand for underwriting |
| title_full_unstemmed | A theory of the demand for underwriting |
| title_short | A theory of the demand for underwriting |
| title_sort | theory of the demand for underwriting |
| topic | DRNTU::Business::Finance::Insurance policies |
| url | https://hdl.handle.net/10356/99238 http://hdl.handle.net/10220/17189 |
| work_keys_str_mv | AT kamiyashinichi atheoryofthedemandforunderwriting AT brownemarkj atheoryofthedemandforunderwriting AT kamiyashinichi theoryofthedemandforunderwriting AT brownemarkj theoryofthedemandforunderwriting |