|
Instructors: Prof. Dr. Petra Steinorth
Event type:
Lecture + practical course
Displayed in timetable as:
bwl-ma-finvers6b
Hours per week:
3
Language of instruction:
English
Min. | Max. participants:
- | -
Comments/contents:
This course deals with core concepts of the theory of insurance demand. After a review of essentials of decision theory the optimal design of insurance products is addressed from an information economics point of view. Optimal risk sharing in a complete information setting is discussed as the benchmark case. The main emphasis is placed on principal agent problems due to superior knowledge of the insured. In particular the class covers adverse selection, moral hazard and insurance fraud which heavily affect almost any real-life insurance market. Implications for product design as well as the interaction between insurance and other markets are analyzed.
Learning objectives:
- To obtain an overview of essential concepts in insurance economics.
- To understand the implications of asymmetric information for insurance contracting.
- To be able to explain and evaluate real-life insurance product design from an economic point of view.
Literature:
Akerlof, George A. (1970): The Market for Lemons: Quality Uncertainty and the Market Mechanism, Quarterly Journal of Economics 84: 488-500.
Arrow, Kenneth J. (1963): Uncertainty and the Welfare Economics of Medical Care, American Economic Review 53: 941-973.
Holmström, Bengt (1979): Moral Hazard and Observability, Bell Journal of Economics 10: 74-90.
Raviv, Artur (1979): The Design of an Optimal Insurance Policy, American Economic Review 69: 84-96.
Rothschild, Michael D. and Joseph E. Stiglitz (1976): Equilibrium in Competitive Insurance Markets: An Essay in the Economics of Imperfect Information, Quarterly Journal of Economics 90: 629-649.
Shavell, Steven (1979): On Moral Hazard and Insurance, Quarterly Journal of Economics 4: 541562.
|
