Testing for asymmetric information using "unused observables" in insurance markets : evidence from the U.K. annuity market

Recurso electrónico / electronic resource
MARC record
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1001 ‎$0‎MAPA20150002372‎$a‎Finkelstein, Amy
24510‎$a‎Testing for asymmetric information using "unused observables" in insurance markets‎$b‎: evidence from the U.K. annuity market‎$c‎Amy Finkelstein, James Poterba
520  ‎$a‎This article tests for asymmetric information in the U.K. annuity market of the 1990s by trying to identify unused observables, attributes of individual insurance buyers that are correlated both with subsequent claims experience and with insurance demand but that insurance companies did not use to set insurance prices. Unlike the widely used positive correlation test for asymmetric information, which searches for a positive correlation between insurance demand and risk experience, the unused observables test is not confounded by heterogeneity in individual preference parameters that may affect insurance demand. We identify residential location as an unused observable in the U.K. annuity market of this period. Even though residential location was observed by all market participants, the decision not to condition prices on it created the same types of market inefficiencies that arise when annuity buyers have private information about mortality risk. Our findings raise questions about how insurance companies select the set of buyer attributes that they use in setting policy prices. In the decade following the period that we study, U.K. insurance companies changed their pricing practices and began to condition annuity prices on a buyer's postcode.
650 4‎$0‎MAPA20080586294‎$a‎Mercado de seguros
650 4‎$0‎MAPA20080590567‎$a‎Empresas de seguros
650 4‎$0‎MAPA20080606695‎$a‎Información asimétrica
650 4‎$0‎MAPA20080592578‎$a‎Política de precios
650 4‎$0‎MAPA20080584580‎$a‎Demanda de seguros
650 4‎$0‎MAPA20080602871‎$a‎Percepción del riesgo
650 4‎$0‎MAPA20080584290‎$a‎Contrato de seguro
651 1‎$0‎MAPA20080638290‎$a‎Reino Unido
7001 ‎$0‎MAPA20150004932‎$a‎Poterba, James
7730 ‎$w‎MAP20077000727‎$t‎The Journal of risk and insurance‎$d‎Nueva York : The American Risk and Insurance Association, 1964-‎$x‎0022-4367‎$g‎01/12/2014 Volumen 81 Número 4 - diciembre 2014 , p. 709-734