Repeated insurance contracts and moral hazard

Ariel Rubinstein, Menahem E. Yaari

    Research output: Contribution to journalArticle

    Abstract

    An attempt is made to account for the frequently observed phenomenon of insurance companies offering discounts to clients who possess a favorable record of past claims. We argue that such discounts provide a mechanism which enables both insurer and insured to counteract the inefficiency which arises from moral hazard.

    Original languageEnglish (US)
    Pages (from-to)74-97
    Number of pages24
    JournalJournal of Economic Theory
    Volume30
    Issue number1
    DOIs
    Publication statusPublished - 1983

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    ASJC Scopus subject areas

    • Economics and Econometrics

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