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The Empirical Measure of Information Problems with Emphasis on Insurance Fraud

  • Chapter
Handbook of Insurance

Abstract

We discuss the difficult question of measuring the effects of asymmetric information problems on resource allocation. Two of them are retained: moral hazard and adverse selection. One theoretical conclusion, shared by many authors, is that information problems may introduce significant distortions into the economy. However, we can verify, in different markets, that efficient mechanisms have been introduced in order to reduce these distortions and even eliminate, at the margin, some residual information problems. This conclusion is stronger for adverse selection. One explanation is that adverse selection is related to exogenous characteristics while moral hazard is due to endogenous actions that may change at any point in time.

I would like to thank Marie-Gloriose Ingabire for her help with bibliographical research, FCAR-Quebec and CRSH-Canada for their financial support. I would also like to mention the researchers who helped me develop several of the ideas on the subject over the years: P.A. Chiappori, K. Dachraoui, N. Doherty, C. Fluet, N. Fombaron, R. Gagné, C. Gouriéroux, P. Lasserre, P. Picard, B. Salanié, P. St-Michel, C. Vanasse, P. Viala. I thank P. Lanoie, C. Fluet, and B. Villeneuve who proposed interesting improvements to the first version of this chapter.

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  1. HEC-Montreal, Canada

    Georges Dionne

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  1. HEC-Montréal, Canada

    Georges Dionne (Risk Management Chair) (Risk Management Chair)

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Dionne, G. (2000). The Empirical Measure of Information Problems with Emphasis on Insurance Fraud. In: Dionne, G. (eds) Handbook of Insurance. Huebner International Series on Risk, Insurance, and Economic Security, vol 22. Springer, Dordrecht. https://doi.org/10.1007/978-94-010-0642-2_12

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