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The Value of Genetic Information in the Life Insurance Market

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  • Michael Hoy
  • Mattias Polborn

Abstract

This paper analyzes the effects of additional information in a life insurance market under adverse selection. It is shown that individuals have an ncentive to acquire information about their risk type if their informational status cannot be observed by insurers. In aggregate, the existence of a testing opportunity has an effect on the equilibrium premium. We describe the conditions under which, from an ex ante standpoint, all individuals gain, all lose or in which some gain and some lose from the existence of the test.

Suggested Citation

  • Michael Hoy & Mattias Polborn, 1998. "The Value of Genetic Information in the Life Insurance Market," CESifo Working Paper Series 165, CESifo.
    • Handle: RePEc:ces:ceswps:_165
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    References listed on IDEAS

    as
    1. Doherty, Neil A. & Thistle, Paul D., 1996. "Adverse selection with endogenous information in insurance markets," Journal of Public Economics, Elsevier, vol. 63(1), pages 83-102, December.
    2. Hellwig, Martin F., 1988. "A note on the specification of interfirm communication in insurance markets with adverse selection," Journal of Economic Theory, Elsevier, vol. 46(1), pages 154-163, October.
    3. Wilson, Charles, 1977. "A model of insurance markets with incomplete information," Journal of Economic Theory, Elsevier, vol. 16(2), pages 167-207, December.
    4. Milgrom, Paul & Roberts, John, 1994. "Comparing Equilibria," American Economic Review, American Economic Association, vol. 84(3), pages 441-459, June.
    5. repec:crs:wpaper:9606 is not listed on IDEAS
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