Asymmetric information in the Home lnsurance Market

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Articles Articles Asymmetric information in the Home lnsurance Market - Ove Aarbu, Karl

Collection: Articles

Title: Asymmetric information in the Home lnsurance Market / Karl Ove Aarbu

Notes: Sumario: We test for the presence of asymmetric information in the home insurance market on a data set containing about half a million home insurance contracts, applying several different specifications of the conditional correlation test. Unlike earlier studies, we control for private information about risk aversion by having access to detailed administrative register information at the policyholder level.Wefind robust evidence of asymmetric information. Asymmetric information may stem from adverse selection or moral hazard. To disentangle moral hazard and adverse selection, we utilize an exogenous law reform that had an effect on the insurance price. Our test shows no indication of moral hazard.

Other categories: 324.1

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