Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2008-08-25
Number: 08-075/3
Author-Name: Jaap Abbring
Author-Email: abbring@tinbergen.nl
Author-Workplace-Name: VU University Amsterdam
Author-Name: Pierre-André Chiappori
Author-Email: pc2167@columbia.edu
Author-Workplace-Name: Columbia University
Author-Name: Tibor Zavadil
Author-Email: tzavadil@feweb.vu.nl
Author-Workplace-Name: VU University Amsterdam
Title: Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data
Abstract: This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard.
Classification-JEL: D82, G22, C41, C14
Keywords: insurance, moral hazard, selection, state dependence, event-history analysis
File-Url: https://papers.tinbergen.nl/08075.pdf
File-Format: application/pdf
File-Size: 563571 bytes
Handle: RePEc:tin:wpaper:20080075