Signaling and adverse selection in the automobile insurance market.

摘要

This dissertation examines the role of asymmetric information and its effects on automobile insurance markets. An empirical investigation of three issues important to automobile insurance markets as indicated by insurance market theory are studied: signaling, adverse selection, and cross subsidization of high risks by low risks.; A simultaneous system of equations which characterize the insurance purchase decision is posited to verify or refute the monotonicity and adverse selection hypotheses. Evidence strongly supports a separating without subsidization equilibrium in the automobile collision insurance market, and there is weak support for the adverse selection hypothesis.