Adverse and Advantageous Selection in the Laboratory

2019 ◽  
Author(s):  
S. Nageeb Ali ◽  
Maximilian Mihm ◽  
Lucas Siga ◽  
Chloe Tergiman
Keyword(s):  
Advantageous Selection

scholarly journals Risk selection into supplemental private health insurance in China

2019 ◽  
Vol 9 (1) ◽  
Author(s):  
Yawen Jiang ◽  
Weiyi Ni
Keyword(s):  
Health Insurance ◽  
Instrumental Variable ◽  
Private Health Insurance ◽  
Developed Countries ◽  
Risk Selection ◽  
Alternative Analysis ◽  
Cross Sectional ◽  
Advantageous Selection ◽  
Using Data ◽  
Sectional Analysis

Abstract Background Information on risk selection is important for the regulation and development of supplemental private health insurance (PHI). The research on risk selection into supplemental PHI has been documented in several developed countries where the regulation of the PHI markets was relatively mature. However, evidence on this important aspect of the supplemental PHI market in China is still absent in the literature. The private insurers in China were not prohibited from discrimination against pre-existing conditions and did not guarantee ongoing enrolment. Therefore, the direction and degree of risk selection could not be inferred using the evidence from the other countries. To provide evidence on risk selection into supplemental PHI in China, we conducted a cross-sectional analysis using data from the 2015 wave of China Health and Retirement Longitudinal Study (CHARLS). Results Using probit models, we found that individuals having better self-reported general health were more likely to enrol in PHI in China, suggesting advantageous selection. This result was confirmed by an alternative analysis using an instrumental variable. We also adjusted the realized occurrence of hospitalization by excluding potential moral hazard effect and showed that the adjusted hospitalization risk was negatively associated with PHI enrolment, which also indicated advantageous selection. Conclusions The findings suggested potential over-insurance of healthier individuals or under-insurance of less healthy individuals. The regulation of the PHI market in China should aim to address the inefficiency. The current study could also contribute to the information base for policymakers in countries where the PHI markets similarly lack strong regulation.

Loss aversion leading to advantageous selection

2017 ◽  
Vol 55 (2-3) ◽  
pp. 203-227
Author(s):  
Christina Aperjis ◽  
Filippo Balestrieri
Keyword(s):  
Loss Aversion ◽  
Advantageous Selection

Loss Aversion Leading to Advantageous Selection

2014 ◽  
Author(s):  
Christina Aperjis ◽  
Filippo Balestrieri
Keyword(s):  
Loss Aversion ◽  
Advantageous Selection

scholarly journals Hidden Overconfidence and Advantageous Selection

2010 ◽  
Vol 35 (2) ◽  
pp. 93-107 ◽  
Author(s):  
Rachel J Huang ◽  
Yu-Jane Liu ◽  
Larry Y Tzeng
Keyword(s):  
Advantageous Selection

scholarly journals Selection in Insurance Markets: Theory and Empirics in Pictures

2011 ◽  
Vol 25 (1) ◽  
pp. 115-138 ◽  
Author(s):  
Liran Einav ◽  
Amy Finkelstein
Keyword(s):  
Public Policy ◽  
Adverse Selection ◽  
Theoretical Basis ◽  
Empirical Work ◽  
Classical Case ◽  
Preventive Health Care ◽  
Insurance Markets ◽  
Risk Averse ◽  
Advantageous Selection ◽  
Policy Interventions

Government intervention in insurance markets is ubiquitous and the theoretical basis for such intervention, based on classic work from the 1970s, has been the problem of adverse selection. Over the last decade, empirical work on selection in insurance markets has gained considerable momentum. This research finds that adverse selection exists in some insurance markets but not in others. And it has uncovered examples of markets that exhibit “advantageous selection”—a phenomenon not considered by the original theory, and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection. Advantageous selection arises when the individuals who are willing to pay the most for insurance are those who are the most risk averse (and so have the lowest expected cost). Indeed, it is natural to think that in many instances individuals who value insurance more may also take action to lower their expected costs: drive more carefully, invest in preventive health care, and so on. Researchers have taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions. In this essay, we present a graphical framework for analyzing both theoretical and empirical work on selection in insurance markets. This graphical approach provides both a useful and intuitive depiction of the basic theory of selection and its implications for welfare and public policy, as well as a lens through which one can understand the ideas and limitations of existing empirical work on this topic.

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