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on Insurance Economics |
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Issue of 2008‒09‒05
one paper chosen by Soumitra K Mallick Indian Institute of Social Welfare and Bussiness Management |
| By: | Jaap Abbring (VU University Amsterdam); Pierre-André Chiappori (Columbia University); Tibor Zavadil (VU University Amsterdam) |
| Abstract: | This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard. |
| Keywords: | insurance; moral hazard; selection; state dependence; event-history analysis |
| JEL: | D82 G22 C41 C14 |
| Date: | 2008–08–25 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20080075&r=ias |