The efficiency of competitive equilibria in insurance markets with asymmetric information

Keith J. Crocker; Arthur Snow

doi:10.1016/0047-2727(85)90005-2

The efficiency of competitive equilibria in insurance markets with asymmetric information

Keith J. Crocker, Arthur Snow

Risk Management

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Abstract

This paper addresses the relationship between competitive equilibria and efficient allocations in an insurance market with asymmetric information. Using the definition of second-best efficiency proposed by Harris and Townsend (1981) for environments characterized by informational assmmetry, the efficiency properties of several proposed market equilibria are examined. We find an analogue to the First Optimality Theorem: A Miyazaki-Wilson equilibrium always results in a second best allocation.

Original language	English (US)
Pages (from-to)	207-219
Number of pages	13
Journal	Journal of Public Economics
Volume	26
Issue number	2
DOIs	https://doi.org/10.1016/0047-2727(85)90005-2
State	Published - Mar 1985

All Science Journal Classification (ASJC) codes

Finance
Economics and Econometrics

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10.1016/0047-2727(85)90005-2

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abstract = "This paper addresses the relationship between competitive equilibria and efficient allocations in an insurance market with asymmetric information. Using the definition of second-best efficiency proposed by Harris and Townsend (1981) for environments characterized by informational assmmetry, the efficiency properties of several proposed market equilibria are examined. We find an analogue to the First Optimality Theorem: A Miyazaki-Wilson equilibrium always results in a second best allocation.",

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The efficiency of competitive equilibria in insurance markets with asymmetric information

Abstract

All Science Journal Classification (ASJC) codes

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