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Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2004

We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by … compute how the size of their loan or the price they quote might affect default rates. It also makes for a simple equilibrium … equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory of endogenous …

Persistent link: https://www.econbiz.de/10014070241

Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2003

We extend the standard model of general equilibrium with incomplete markets to allow for default and punishment by … their loan or the price they quote might affect default rates. The equilibrium refinement we propose, in order to rule out … refined equilibrium always exists in our model, and that default, in conjunction with refinement, opens the door to a theory …

Persistent link: https://www.econbiz.de/10014128751

Default and Punishment in General Equilibrium

Dubey, Pradeep K.; Geanakoplos, John; Shubik, Martin - 2004

Persistent link: https://www.econbiz.de/10014074211

Competitive Pooling : Rothschild-Stiglitz Reconsidered

Dubey, Pradeep K.; Geanakoplos, John - 2003

We build a model of competitive pooling, which incorporates adverse selection and signalling into general equilibrium. Pools are characterized by their quantity limits on contributions. Households signal their reliability by choosing which pool to join. In equilibrium, pools with lower quantity...

Persistent link: https://www.econbiz.de/10014121720

Signalling and Default : Rothschild-Stiglitz Reconsidered

Dubey, Pradeep K.; Geanakoplos, John - 2003

In our previous paper we built a general equilibrium model of default and punishment in which equilibrium always exists … sales constraints as equilibrium signals. By specializing the default penalties and imposing an exclusivity constraint on …

Persistent link: https://www.econbiz.de/10014128748

Transparency aversion and insurance market equilibria

Gemmo, Irina; Browne, Mark Joseph; Gründl, Helmut - 2017

Telemonitoring devices can be used to screen consumers' characteristics and mitigate information asymmetries that lead to adverse selection in insurance markets. However, some consumers value their privacy and dislike sharing private information with insurers. In the second-best efficient...

Persistent link: https://www.econbiz.de/10011724373

Chapter 5. Insurance and Insurance Markets

Dionne, Georges; Harrington, Scott E. - In: Handbook of the economics of risk and uncertainty : volume 1, (pp. 203-261). 2014

Kenneth Arrow and Karl Borch published several important articles in the early 1960s that can be viewed as the beginning of modern economic analysis of insurance activity. This chapter reviews the main theoretical and empirical contributions in insurance economics since that time. The review...

Persistent link: https://www.econbiz.de/10014025527

Economies with Observable Types

Siconolfi, Paolo; Rustichini, Aldo - In: Review of Economic Dynamics 15 (2012) 1, pp. 57-71

We study economies of asymmetric information with observable types. Trade takes place in lotteries. Individuals face a standard budget constraint, while the incentive compatibility constraints are imposed on the production set of the intermediaries. This formalization encompasses Moral Hazard,...

Persistent link: https://www.econbiz.de/10008830020

Adverse Selection in Insurance Markets : On-Demand Contracts As a Screening Device

Braun, Alexander - 2020

We show that on-demand insurance contracts, an innovative form of coverage recently introduced through the InsurTech sector, can serve as a screening device. To this end, we develop a new adverse selection model consistent with Wilson (1977), Miyazaki (1977) and Spence (1978). Consumers have...

Persistent link: https://www.econbiz.de/10012822927

Moral Hazard and Advantageous Selection in Private Disability Insurance

Soika, Sebastian - 2017

We analyse asymmetric information in private long-term disability insurance. Using the elimination period as a measure of coverage, we examine the correlation between risk and coverage. Our unique data set includes both group and individual insurance. We are thus able to disentangle moral hazard...

Persistent link: https://www.econbiz.de/10012971411