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Information Asymmetry on the Czech Insurence Market

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  • Zdeněk Rybák

Abstract

The goal of this paper is to describe the problem of information asymmetry within the commercial insurance market of the Czech Republic. At first, the paper focuses on the history and theoretical definition of information asymmetry. It is regarded as one of the market failures that may have possible negative impacts into production or consumption. Negative impact of asymmetry is also described by the micro-economic model of Michael Rothschild and Joseph E. Stiglitz, who analyzed the impact of it on market equilibrium. Then paper focuses on the current situation within the insurance market, which is modelled with three participants (client, broker and insurance company). Paper covers forms of asymmetry by each participant, sources of asymmetry, motivation for asymmetry and concrete examples of information asymmetry. Finally the paper also provides available data which can express the current situation in the Czech Republic and provides actually applied solutions for solving the information asymmetry problem. There are also mentioned specific issues, which are related to information asymmetry - lack of financial education and problem of privacy.

Suggested Citation

  • Zdeněk Rybák, 2015. "Information Asymmetry on the Czech Insurence Market," Ekonomika a Management, Prague University of Economics and Business, vol. 2015(1).
    • Handle: RePEc:prg:jnleam:v:2015:y:2015:i:1:id:244
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    References listed on IDEAS

    as
    1. Richard Arnott & Joseph E. Stiglitz, 1991. "Price Equilibrium, Efficiency, and Decentralizability in Insurance Markets," NBER Working Papers 3642, National Bureau of Economic Research, Inc.
    2. Chassagnon, A. & Chiappori, P.A., 1994. "Insurance Under Moral Hazard and Adverse Selection: The Case of Pure Competition," Papers 28, Laval - Laboratoire Econometrie.
    3. Michael Rothschild & Joseph Stiglitz, 1976. "Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 90(4), pages 629-649.
    4. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Czech Republic; Česká republika; Riziko; Information asymmetry; Insurance; Risks; Asimetrie informací; Pojištění;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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