In this paper, we reconsider the Rothschild-Stiglitz equilibrium of an insurance market under adverse selection. We examine the case in which insurers have heterogenous private information about the policyholder's type. This raises the problem of the transmission of information among insurers....

We examine the optimal risk-taking behaviour of a risk-averse individual under the assumption of a guaranteed floor for wealth (limited liability). We show that the existence of limited liability raises the optimal exposure to risk. Also, there is a positive lower bound to initial wealth...

We consider in this paper the interaction between precautionary savings and insurance demand. Under the standard intertemporal expected utility framework, the effect of an increase in the concavity of the utility function is ambiguous because of the inability of this framework to distinguish...