Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data

J.H. Abbring, P.A. Chiappori, T. Zavadil

Research output: Working paperDiscussion paperOther research output

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Abstract

This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages72
Volume2008-77
Publication statusPublished - 2008

Publication series

NameCentER Discussion Paper
Volume2008-77

Fingerprint

Moral hazard
Insurance
Ex post moral hazard
Experience rating
Incentives
Micro data
Car

Keywords

  • insurance
  • moral hazard
  • selection
  • state dependence
  • event-history analysis

Cite this

Abbring, J. H., Chiappori, P. A., & Zavadil, T. (2008). Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. (CentER Discussion Paper; Vol. 2008-77). Tilburg: Econometrics.
Abbring, J.H. ; Chiappori, P.A. ; Zavadil, T. / Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. Tilburg : Econometrics, 2008. (CentER Discussion Paper).
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Abbring, JH, Chiappori, PA & Zavadil, T 2008 'Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data' CentER Discussion Paper, vol. 2008-77, Econometrics, Tilburg.

Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. / Abbring, J.H.; Chiappori, P.A.; Zavadil, T.

Tilburg : Econometrics, 2008. (CentER Discussion Paper; Vol. 2008-77).

Research output: Working paperDiscussion paperOther research output

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Abbring JH, Chiappori PA, Zavadil T. Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. Tilburg: Econometrics. 2008. (CentER Discussion Paper).