Jian Xin Hansel TEO will defend his thesis on Monday 5 September at 2:30 PM (Auditorium 3).
« Essays on the economics of insurance markets »
- Helmuth CREMER, Toulouse School of Economics, supervisor
- Jean-Marie LOZACHMEUR, CNRS, Toulouse School of Economics, Co-supervisor
- Mathieu LEFEBVRE, Aix-Marseille Université, Rapporteur
- Pierre PESTIEAU, Université de Liège, Rapporteur
- Chiara CANTA, Toulouse Business School, Examinor
- Emmanuel THIBAULT, Université de Perpignan, Examinaor
What affects people’s decision to purchase insurance and what determines if they are insured? This thesis collects three chapters which explore these questions from different perspectives. In Chapter One, I adopt the sufficient-statistics approach to quantify the consumption-smoothing value of long-term care insurance. My analysis extends the cur- rent framework to allow for adjustment costs in consumption and derives a generalised implementation formula for measuring the marginal value of insurance. I then implement the derived measure by using panel data from the Health and Retirement Survey to estimate the implied value of insurance against nursing home episodes. On average, I find that households’ food consumption drops sharply by about 26 per cent during a nursing home episode, while the probability of home liquidation increases by nine percentage points. These estimates imply uninsured people are willing to pay a 60 per cent premium over actuarially fair rates for insurance against nursing home expenses. In Chapter Two, I propose and analyse a monopoly insurance contracting model with unobserved heterogeneity in both risk and preferences for formal insurance. I show that monopoly optima can have partial take-up and adverse selection along either, or both, the intensive and extensive margins. The particular configuration at an optimum depends on the degree of heterogeneity in participation preferences. With a low degree of heterogeneity, all individuals are insured and there is only selection between contracts. When there is a high degree of heterogeneity, there is partial take-up and adverse selection occurs simultaneously between contracts and in take-up. In Chapter Three, I study how imperfect competition affects equilibrium insurance allocations by analysing a model of horizontally-differentiated insurers. I show that equilibrium in this model always features risk separation, with the equilibrium allocation characterised by conditions which capture intensive and extensive margin trade-offs in profit. Consumer surplus is strictly increasing and while the level of coverage provided to low-risks is strictly decreasing in the degree of competition.