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One-sided commitment in life insurance contracts: Evidence from Health and Retirement Study

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  • Wu, Xi
  • Gan, Li

Abstract

We study the properties of long-term insurance contracts using an individual-level survey data. Results indicate longer-term contracts are involved with lower lapse rates and healthier pool. These are consistent with the implications of Hendel and Lizzeri model with one-sided commitment.

Suggested Citation

  • Wu, Xi & Gan, Li, 2022. "One-sided commitment in life insurance contracts: Evidence from Health and Retirement Study," Economics Letters, Elsevier, vol. 219(C).
    • Handle: RePEc:eee:ecolet:v:219:y:2022:i:c:s0165176522003081
    DOI: 10.1016/j.econlet.2022.110825
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    References listed on IDEAS

    as
    1. Igal Hendel & Alessandro Lizzeri, 2003. "The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(1), pages 299-328.
    2. Milton Harris & Bengt Holmstrom, 1982. "A Theory of Wage Dynamics," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(3), pages 315-333.
    3. Tomas Philipson & John Cawley, 1999. "An Empirical Examination of Information Barriers to Trade in Insurance," American Economic Review, American Economic Association, vol. 89(4), pages 827-846, September.
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    More about this item

    Keywords

    Life insurance; One-sided commitment;

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • I1 - Health, Education, and Welfare - - Health

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