Preprint
Implementability in Insurance Markets with Adverse Selection
arXiv
arXiv
09/25/2026
DOI: 10.48550/arxiv.2609.31959
Abstract
We consider an insurance market with hidden information, where the agent's type is private information and is drawn from an arbitrary type space. We discuss the notion of implementability of the collection of retention functions. Namely, how to select premium schedules so that the resulting menu of contracts is incentive compatible, or truthtelling. Specifically, for general type spaces, implementability is equivalent to cyclical monotonicity of the collection of retention functions. For compact interval type spaces, we show that submodularity is a sufficient condition for implementability, under suitable type ordering assumptions. Moreover, for any implementable collection of retention functions, we characterize the corresponding premium schedule. Finally, we apply our results to several standard classes of insurance contracts, for which the general implementability conditions admit simpler characterizations, and we provide several numerical illustrations.
Details
- Title: Subtitle
- Implementability in Insurance Markets with Adverse Selection
- Creators
- Maria Andraos - University of WaterlooMario Ghossoub - University of Iowa
- Resource Type
- Preprint
- Publication Details
- arXiv
- DOI
- 10.48550/arxiv.2609.31959
- ISSN
- 2331-8422
- Publisher
- arXiv
- Language
- English
- Date posted
- 09/25/2026
- Academic Unit
- Statistics and Actuarial Science; Center for Social Science Innovation
- Record Identifier
- 9985237507202771
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