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Propitious Selection in Insurance

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Author Info
Hemenway, David
Abstract

The theory of propitious selection suggests that there are risk-avoiding personalities who both take physical precautions and buy financial security (insurance). Conversely, there are risk seekers who tend to do neither. Survey evidence is presented that is consistent with the theory. Individuals who obtain motor vehicle liability coverage are less likely than others to drink-and-drive, and are more likely to engage in health-beneficial (risk-avoiding) behaviors. Propitious selection may be a general phenomenon promoting favorable selection in many real world insurance markets. Copyright 1992 by Kluwer Academic Publishers

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Publisher Info
Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 5 (1992)
Issue (Month): 3 (July)
Pages: 247-51
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Handle: RePEc:kap:jrisku:v:5:y:1992:i:3:p:247-51

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Web page: http://www.springerlink.com/link.asp?id=100299

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  1. Bruno Jullien & Bernard Salanié & François Salanié, 2007. "Screening risk-averse agents under moral hazard: single-crossing and the CARA case," Economic Theory, Springer, vol. 30(1), pages 151-169, January. [Downloadable!] (restricted)
  2. Philippe, DE DONDER & Jean, HINDRIKS, 2006. "Does Propitious Selection Explain why Riskier People Buy less Insurance," Discussion Papers 2006017, Université catholique de Louvain, Département des Sciences Economiques. [Downloadable!]
    Other versions:
  3. Hanming Fang & Michael P. Keane & Dan Silverman, 2006. "Sources of Advantageous Selection: Evidence from the Medigap Insurance Market," NBER Working Papers 12289, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  4. JULLIEN, Bruno & SALANIÉ, Bernard & SALANIÉ, François, 2001. "Screening Risk-Averse Agents Under Moral Hazard," IDEI Working Papers 131, Institut d'Économie Industrielle (IDEI), Toulouse. [Downloadable!]
    Other versions:
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This page was last updated on 2008-12-16.


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