Characterization and uniqueness of equilibrium in competitive insurance

dc.contributor.author	FARINHA LUZ, Vitor
dc.date.accessioned	2015-08-05T12:29:56Z
dc.date.available	2015-08-05T12:29:56Z
dc.date.issued	2015
dc.identifier.issn	1830-7728
dc.identifier.uri	https://hdl.handle.net/1814/36675
dc.description.abstract	This paper provides a complete characterization of equilibria in a game-theoretic version of Rothschild and Stiglitz (1976)’s model of competitive insurance. I allow for stochastic contract offers by insurance firms and show that a unique symmetric equilibrium always exists. Exact conditions under which the equilibrium involves mixed strategies are provided. The mixed equilibrium features: (i) cross-subsidization across risk levels, (ii) dependence of offers on the risk distribution and (iii) price dispersion generated by firm randomization over offers.	en
dc.format.mimetype	application/pdf	en
dc.language.iso	en	en
dc.relation.ispartofseries	EUI MWP	en
dc.relation.ispartofseries	2015/15	en
dc.relation.hasversion	https://hdl.handle.net/1814/69732
dc.rights	info:eu-repo/semantics/openAccess	en
dc.subject	Asymmetric and private information	en
dc.subject	Mechanism design	en
dc.subject	Oligopoly	en
dc.subject	Economics of contracts	en
dc.subject	Insurance	en
dc.subject	C72	en
dc.subject	D43	en
dc.subject	D82	en
dc.subject	D86	en
dc.subject	G22	en
dc.title	Characterization and uniqueness of equilibrium in competitive insurance	en
dc.type	Working Paper	en