Handel, Ben; Hendel, Igal; Whinston, Michael D. - 2014
emphasis on two potential sources of inefficiency: (i) adverse selection and (ii) premium reclassification risk. We find … substantial adverse selection leading to full unraveling of our simulated exchange, even when age can be priced. While the welfare … cost of adverse selection is substantial when health status cannot be priced, that of reclassification risk is five times …