nep-ias New Economics Papers
on Insurance Economics
Issue of 2008‒09‒05
one paper chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data By Jaap Abbring; Pierre-André Chiappori; Tibor Zavadil

  1. 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

This nep-ias issue is ©2008 by Soumitra K Mallick. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.