DREZE, Jacques; SCHOKKAERT, Erik - Center for Operations Research and Econometrics (CORE), … - 2012
We show that the logic of Arrow's theorem of the deductible, i.e. that it is optimal to focus insurance coverage on the states with largest expenditures, remains at work in a model with ex post moral hazard. The optimal insurance contract takes the form of a system of "implicit deductibles",...