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Technological advances in self-insurance and self-protection

Author

Listed:
  • Chang-Ming Lee

    (College of Business, Feng Chia University)

Abstract

This study investigates how technological advances in self-insurance (or self-protection) affect the optimal level of self-insurance (or self-protection) and that of insurance, if insurance is also taken into account. Conditions are derived for determining the signs of changes in the optimal levels of decision variables due to improved technology. Two cross-derivatives are found to be the key factors. Classification of technological advances is suggested based on the two cross-derivatives. The results show that when analyzed pairwise, “neutral†technological advances, according to the classification, decrease the optimal level of self-insurance and that of insurance, but increase the optimal level of self-protection and that of insurance.

Suggested Citation

  • Chang-Ming Lee, 2015. "Technological advances in self-insurance and self-protection," Economics Bulletin, AccessEcon, vol. 35(3), pages 1488-1500.
    • Handle: RePEc:ebl:ecbull:eb-15-00232
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2015/Volume35/EB-15-V35-I3-P149.pdf
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    More about this item

    Keywords

    self-insurance; self-protection; technological advance;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D9 - Microeconomics - - Micro-Based Behavioral Economics

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