Journal article
Endogenous information, adverse selection, and prevention: Implications for genetic testing policy
Journal of health economics, Vol.55, pp.95-107
09/01/2017
DOI: 10.1016/j.jhealeco.2017.06.010
PMID: 28774725
Abstract
We examine public policy toward the use of genetic information by insurers. Individuals engage in unobservable primary prevention and have access to different prevention technologies. Thus, insurance markets are affected by moral hazard and adverse selection. Individuals can choose to take a genetic test to acquire information about their prevention technology. Information has positive decision-making value, that is, individuals may adjust their behavior based on the result of the test. However, testing also exposes individuals to uncertainty over the available insurance contract, so-called classification risk, which lowers the value of information. In our analysis we distinguish between four different policy regimes, determine the value of information under each regime and associated equilibrium outcomes on the insurance market. We show that the policy regimes can be Pareto ranked, with a duty to disclose being the preferred regime and an information ban the least preferred one.
Details
- Title: Subtitle
- Endogenous information, adverse selection, and prevention: Implications for genetic testing policy
- Creators
- Richard Peter - Department of Finance, University of Iowa, United StatesAndreas Richter - Munich Risk and Insurance Center, Ludwig-Maximilians-Universität Munich, GermanyPaul Thistle - University of Nevada, Las Vegas
- Resource Type
- Journal article
- Publication Details
- Journal of health economics, Vol.55, pp.95-107
- Publisher
- Elsevier B.V
- DOI
- 10.1016/j.jhealeco.2017.06.010
- PMID
- 28774725
- ISSN
- 0167-6296
- eISSN
- 1879-1646
- Grant note
- name: Nevada Insurance Education Foundation
- Language
- English
- Date published
- 09/01/2017
- Academic Unit
- Finance
- Record Identifier
- 9984380421402771
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