Foundations of Insurance Economics

1. Front Matter

   Pages i-xv

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2. Introduction

   1. An Introduction to Insurance Economics

      • Georges Dionne, Scott E. Harrington

      Pages 1-48

3. Utility, Risk, and Risk Aversion

   1. Choice Under Uncertainty: Problems Solved and Unsolved

      • Mark J. Machina

      Pages 49-82

   2. Risk Aversion in the Small and in the Large

      • John W. Pratt

      Pages 83-98

   3. Increasing Risk: I. A Definition

      • Michael Rothschild, Joseph E. Stiglitz

      Pages 99-117

4. Demand for Insurance

   1. Aspects of Rational Insurance Purchasing

      • Jan Mossin

      Pages 118-133

   2. Incomplete Markets for Insurance: An Overview

      • Harris Schlesinger, Neil A. Doherty

      Pages 134-155

   3. The Interdependence of Individual Portfolio Decisions and the Demand for Insurance

      • David Mayers, Clifford W. Smith Jr.

      Pages 156-163

   4. Market Insurance, Self-Insurance, and Self-Protection

      • Isaac Ehrlich, Gary S. Becker

      Pages 164-189

   5. On the Corporate Demand for Insurance

      • David Mayers, Clifford W. Smith Jr.

      Pages 190-205

   6. The Demand for Insurance and Protection: The Case of Irreplaceable Commodities

      • Philip J. Cook, Daniel A. Graham

      Pages 206-219

5. Insurance and Resource Allocation

   1. Insurance, Risk and Resource Allocation

      • Kenneth J. Arrow

      Pages 220-229

   2. Equilibrium in a Reinsurance Market

      • Karl Borch

      Pages 230-250

   3. The Design of an Optimal Insurance Policy

      • Artur Raviv

      Pages 251-263

   4. Risk Aversion and the Negotiation of Insurance Contracts

      • Richard E. Kihlstrom, Alvin E. Roth

      Pages 264-279

6. Moral Hazard

   1. On Moral Hazard and Insurance

      • Steven Shavell

      Pages 280-301

   2. An Analysis of the Principal-Agent Problem

      • Sanford J. Grossman, Oliver D. Hart

      Pages 302-340

   3. The Judgment Proof Problem

      • S. Shavell

      Pages 341-354

7. Adverse Selection

   1. Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information

      • Michael Rothschild, Joseph Stiglitz

      Pages 355-375

   2. Adverse Selection and Statistical Discrimination

      • B. G. Dahlby

      Pages 376-385

Economic and financial research on insurance markets has undergone dramatic growth since its infancy in the early 1960s. Our main objective in compiling this volume was to achieve a wider dissemination of key papers in this literature. Their significance is highlighted in the introduction, which surveys major areas in insurance economics. While it was not possible to provide comprehensive coverage of insurance economics in this book, these readings provide an essential foundation to those who desire to conduct research and teach in the field. In particular, we hope that this compilation and our introduction will be useful to graduate students and to researchers in economics, finance, and insurance. Our criteria for selecting articles included significance, representativeness, pedagogical value, and our desire to include theoretical and empirical work. While the focus of the applied papers is on property-liability insurance, they illustrate issues, concepts, and methods that are applicable in many areas of insurance. The S. S. Huebner Foundation for Insurance Education at the University of Pennsylvania's Wharton School made this book possible by financing publication costs. We are grateful for this assistance and to J. David Cummins, Executive Director of the Foundation, for his efforts and helpful advice on the contents. We also wish to thank all of the authors and editors who provided permission to reprint articles and our respective institutions for technical and financial support.

• Assistance
• Finance
• Financing
• growth

• Université de Montréal, Canada

  Georges Dionne

• University of South Carolina, USA

  Scott E. Harrington

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