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Testing for Asymmetric Information in Insurance Markets

Chiappori, Pierre A.; Salanie, Bernard

The first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context. We also argue that insurance data are particularly well suited to such empirical investigations. To illustrate this claim, we use data on contracts and accidents to investigate the extent of asymmetric information in the French market for automobile insurance. Using various parametric and nonparametric methods, we find no evidence for the presence of asymmetric information in this market.

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Title
Journal of Political Economy
DOI
https://doi.org/10.1086/262111

More About This Work

Academic Units
Economics
Published Here
March 10, 2015
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