Self-Protection and Insurance With Interdependencies

Loading...
Thumbnail Image
Penn collection
Operations, Information and Decisions Papers
Degree type
Discipline
Subject
insurance
self-protection
interdependencies
externality
Economic Theory
Insurance
Other Economics
Funder
Grant number
License
Copyright date
Distributor
Related resources
Author
Muermann, Alexander
Kunreuther, Howard
Contributor
Abstract

We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling “at-fault” insurance can partially internalize this externality and thereby improve individual and social welfare.

Advisor
Date Range for Data Collection (Start Date)
Date Range for Data Collection (End Date)
Digital Object Identifier
Series name and number
Publication date
2008-04-01
Journal title
Journal of Risk and Uncertainty
Volume number
Issue number
Publisher
Publisher DOI
Journal Issue
Comments
Recommended citation
Collection