Insurance markets are characterized by profound market imperfections. Insurance intermediaries reduce transaction costs and information asymmetries. From transaction cost economics, agency theory, and law and economics literature the hypothesis is derived that insurance brokers may provide more...

This paper considers an economy where individuals differ in productivity and in risk. Rochet (1991) has shown that when private insurance markets offer full coverage at fair rates, social insurance is desirable if and only if risk and productivity are negatively correlated. This condition is...