Adverse Selection Without Single Crossing

C. Schottmuller

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Abstract

Some results can be readily applied. For example, overinsurance, i.e. insurance levels above first best as in 'Cadillac' insurance plans, can be rationalized. In a non-linear pricing framework, the model also provides an explanation for marginal prices below marginal costs as observed in flat rate offers.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages53
Volume2011-123
Publication statusPublished - 2011

Publication series

NameCentER Discussion Paper
Volume2011-123

Keywords

  • adverse selection
  • single crossing
  • Spence-Mirrlees condition
  • global incentive compatibility

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