Repeated Insurance Contracts with Adverse Selection and Limited Commitment

Arthur J. Hosios; Michael Peters

doi:10.2307/2937846

Repeated Insurance Contracts with Adverse Selection and Limited Commitment

The Quarterly Journal of Economics ◽

10.2307/2937846 ◽

1989 ◽

Vol 104 (2) ◽

pp. 229 ◽

Cited By ~ 45

Author(s):

Arthur J. Hosios ◽

Michael Peters

Keyword(s):

Adverse Selection ◽

Limited Commitment ◽

Insurance Contracts

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Adverse Selection, Aggregate Uncertainty, and the Role for Mutual Insurance Contracts

The Journal of Business ◽

10.1086/296518 ◽

1990 ◽

Vol 63 (4) ◽

pp. 493 ◽

Cited By ~ 59

Author(s):

Bruce D. Smith ◽

Michael J. Stutzer

Keyword(s):

Adverse Selection ◽

Insurance Contracts ◽

Aggregate Uncertainty ◽

Mutual Insurance

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The Wrong Shape of Insurance? What Cross-Sectional Distributions Tell Us about Models of Consumption Smoothing

American Economic Journal Macroeconomics ◽

10.1257/mac.5.4.107 ◽

2013 ◽

Vol 5 (4) ◽

pp. 107-140 ◽

Cited By ~ 10

Author(s):

Tobias Broer

Keyword(s):

Risk Sharing ◽

Limited Commitment ◽

Cross Sectional ◽

Joint Distributions ◽

Insurance Contracts ◽

Moment Measures ◽

Method Of Moments Estimation ◽

Estimated Risk ◽

Standard Models ◽

Insurance Model

This paper shows how two standard models of consumption risk-sharing—self-insurance through borrowing and saving and limited commitment to insurance contracts—replicate similarly well the standard, second-moment measures of insurance observed in US micro data. A nonparametric analysis, however, reveals strongly contrasting and counterfactual joint distributions of consumption, income and wealth. Method of moments estimation shows how measurement error in consumption eliminates excessive skewness and smoothness of consumption growth. Moreover, counterfactual nonlinearities disappear at high-estimated risk aversion under self-insurance, but are a robust feature of limited commitment. Its “shape of insurance” thus argues in favor of the self-insurance model. (JEL D14, D81, D91, G22, E21)

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