Journal article
Experimental evidence on coverage choices and contract prices in the market for corporate insurance
Experimental economics : a journal of the Economic Science Association, Vol.11(1), pp.67-95
03/01/2008
DOI: 10.1007/s10683-006-9152-y
Abstract
In this paper, we present experimental evidence on the effect adverse selection has on coverage choices and pricing in corporate insurance markets. Two sets of experimental data, each generated by experiments utilizing a specific parameterization of a corporate insurance decision, are presented to gauge these effects. In the first, subject behavior conforms to a unique equilibrium in which high risk firms choose higher coverage and contracts are priced accordingly. Insurers act competitively and convergence to equilibrium behavior is marked. In the second set, there is little evidence that subject behavior is consistent with either of the two equilibrium outcomes supported by the experimental setting-pooling by fully insuring losses and pooling by self insuring.
Details
- Title: Subtitle
- Experimental evidence on coverage choices and contract prices in the market for corporate insurance
- Creators
- Gautam Goswami - Fordham UniversityMartin F. Grace - Georgia State UniversityMichael J. Rebello - Tulane University
- Resource Type
- Journal article
- Publication Details
- Experimental economics : a journal of the Economic Science Association, Vol.11(1), pp.67-95
- Publisher
- Springer Nature
- DOI
- 10.1007/s10683-006-9152-y
- ISSN
- 1386-4157
- eISSN
- 1573-6938
- Number of pages
- 29
- Language
- English
- Date published
- 03/01/2008
- Academic Unit
- Finance
- Record Identifier
- 9984700653102771
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