When is a coinsurance-type insurance policy inferior or even giffen?

Document Type

Journal article

Source Publication

Journal of Risk and Insurance

Publication Date

6-1-2008

Volume

75

Issue

2

First Page

343

Last Page

364

Abstract

This article derives the necessary and sufficient conditions for a coinsurance-type insurance policy covering a particular risk to be inferior and to be Giffen. Mossin's decreasing absolute risk aversion assumption for insurance to be inferior is avoided. The result generalizes Hoy and Robson and Briys, Dionne, and Eeckhoudt's results to the case with a continuum of states and relaxes their assumption of constant relative risk aversion. It is shown that knowledge about the distribution of risk can be used to relax assumptions on an utility function for a coinsurance-type insurance policy to be inferior and to be Giffen.

DOI

10.1111/j.1539-6975.2008.00263.x

Print ISSN

00224367

Publisher Statement

Copyright © The Journal of Risk and Insurance, 2008. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Language

English

Recommended Citation

Hau, A. (2008). When is a coinsurance-type insurance policy inferior or even giffen? Journal of Risk and Insurance, 75(2), 343-364. doi: 10.1111/j.1539-6975.2008.00263.x

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