Publications [#266964] of Tracy R. Lewis

Journal Articles

1. Lewis, TR; Sappington, DEM, Insurance, adverse selection, and cream-skimming, Journal of Economic Theory, vol. 65 no. 2 (January, 1995), pp. 327-358, Elsevier BV, ISSN 0022-0531 [doi]
   (last updated on 2023/11/06)

   Abstract:
   We examine optimal insurance policies in a setting where some individuals are perfectly informed about the benefits they would receive under any proposed plan, and others share the insurance provider’s imperfect knowledge about likely benefits. The optimal insurance policy is shown to take on a particularly simple linear form, providing full insurance for the smallest and largest wealth realizations, and no insurance for a range of intermediate wealth realizations. This basic form of the optimal insurance policy persists in dynamic settings and those with endogenous information acquisition. Journal of Economic Literature Classification Numbers: D31, D82, H50. © 1995 Academic Press, Inc.