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