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Description

Willardsen presented on his upcoming article with the same title. The abstract from this paper is as follows:

Understanding the relative significance of adverse selection and moral hazard is important in determining effective policy for insurance markets. Separate identification of these two effects, empirically, is difficult. To overcome this limitation, this paper uses experimental methods to examine how adverse selection and moral hazard separately affect agent performance in a real-effort task. In particular, we explore how agent behavior (effort in the task) changes across a baseline with no insurance option, a treatment where individuals can choose to purchase insurance, and a third treatment where individuals must purchase insurance. We find that our platform can be helpful in studying issues that may arise in different insurance settings (e.g., workers compensation insurance or unemployment insurance).

Publication Date

10-10-2018

Disciplines

Business | Economics

Moral Hazard and Adverse Selection in the Insurance Market


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