ORCID: https://orcid.org/0000-0002-2588-4813 and Thistle, Paul
(November 2013):
Endogenous Information and Adverse Selection
under Loss Prevention.
Abstract
We examine the endogenous value of information in an insurance market with potential adverse selection in the efficiency of prevention technology. By introducing observable preventive effort for all risk types classification risk might be overcome: If decision-makers adjust their prevention behavior to the information acquired, information might be valuable. Consequently, a first-best efficient risk allocation does not necessarily deter information acquisition. Allowing for prevention does not change the ordering of the value of information across disclosure regimes compared to a situation without prevention. This has important policy implications for the areas of genetic testing, HIV testing and product liability.
Item Type: | Paper |
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Keywords: | information value, loss prevention, adverse selection |
Faculties: | Munich School of Management > Institute for Risk Management and Insurance |
Subjects: | 300 Social sciences > 330 Economics |
JEL Classification: | D11, D82, G22, G28 |
Language: | English |
Item ID: | 95610 |
Date Deposited: | 05. Mar 2024, 09:30 |
Last Modified: | 05. Mar 2024, 09:30 |