Kartenstapel

• Pooling

  • Offer which is accpeted by both risk groups

• Self Selecting

  • Two differnet contracts are offered, the insured buys the offer which is designed for his group

A set of policies is called Nash Equilibrium

• Contracts in A are purchased

• Every Contract in A generates non negative expected profit

• Outside A there is no set of policies that make non-negative (expected) profit individually and positive (expected) profit in aggregate, when offered in Addition to A

A set of policies is called Wilson Equilibrium

• Contracts in A are purchased

• Every Contract in A generates non negative expected profit

• Outside A there is no set of policies that make non-negative (expected) profit individually and positive (expected) profit in aggregate, after the unprofitable policies in the original set have been withdrawn

• Self Selection design

• High Risk customers receive full insurance

• Low Risk are paying reservation price

• The price paid by high risk insured determines the coverage level for low risk insured

• Trade off between high risk profit increase and low risk profit decrease

• high proportion of high risk customer yields higher risk premium

• The smaller the high risk proportion, the higher the interest to insure low risk people

It includes two period contracts.

• Policyholders informational advantage

  • Absence of private information

  • Suprior informaition of insurer

• Offsetting factors

  • Interaction between risk and other purchase related factors

    
    

It quantifies how risk attitude changes with increasing wealth

• Holt and Laury -> choices between incentivized lotteries

• Actual Decision oder risks

• Domain specific risk taking

• Self-Reported risk preferences

• Explaination

  • Observing Experimental choices in paid lotteries

• Pro

  • Standard in economics

  • Established routine to estimate risk aversion coefficient

• Cons

  • Individuals have diffilculties to understand measurement

  • Low retest stability

• Pro

  • Actual Risk behavior is observerd

• Cons

  • May be biased

• Explain

  • Scale of 5 domains of risk taking (Financial, Ethical, Safety, Social and Recreational decisions

• Pro

  • Distinguish between risk taking and risk perception

• Cons

  • Relationship to risk aversion is unclear

  • Difficult to adminsiter in time-sensitve setting

  
  

• Pro

  • Easy to administer for larger samples

  • Good prediction of risk behavior

• Cons

  • Relationship to risk aversion measures unclear

• Individual do think in probabilites which are not equal to the objevtive probability

• Due to habits, people under and overestimate risks

• They buy insurance with subjective risk estimates, subjective probabilities but on an objective price

• Conjuction fallacy

  • Probability is based on plausiblity

• Optimism

  • Overestimate favorable events

• Availability

  • Events with more media coverage are perceived more likely

• Reasonable levels of risk aversion over large stakes implies risk neutrality over small to modest stakes

• Risk Aversion over Modest Stakes implies implausible high Risk Aversion over large stakes

• If diminishing maringal utility drives risk aversion, people should be risk neutral to modest stakes

• This implies, that people should not purchases for insurances over modess losses, but people oftel select low deductiable at prices higher than the fair price

• People show high level of risk aversion on modest risk

• RRA based on deductiable is very high

• Diminishing marginal utilty alone cannot explain their behavior

• Borrowing Constraints

• Sales Agent

• Menu Effects

• Its a self selection design

• Monopolists profit is greater than one period model

  • Term and Condition for second period depends on wheter a loss occourd in the first period or not

• < 0 -> e is reduced more than linearly increasing coverage

• = 0 -> e is reduced linearly with increasing coverage

• > 0 -> e is reduced less than linearly increasing coverage

• If a insurance company has to cover a repair service, they have to distinguish between the price nad qunatity component

• The insured looses their importance for prices

It denotes insuramce-induced changes in an insureds behavior which occours if the insurer cannot separatly observe the insureds behavior and the exegenous risk

• RAND Health Insurance Experiment: Found that more cost-sharing reduced medical visits but did not impact life expectancy (except for the poorest).

• Oregon Medicaid Experiment: Increasing insurance led to more medical visits, but both necessary and unnecessary care increased.

• The insured should only take partial insurance and should substitue coverage by investing in loss prevention

  • Partial Insurance provides incentives

• Only second best option can be achived -> its not only a risk allocation but also providing incentives for the insured

• ex-ante moral hazard: Behavior before the loss event, reducing the probability of a claim (e.g., risk mitigation efforts)

• ex-post moral hazard: Behavior after the loss, influencing claim size (e.g., overstating damages)

Moral hazard occurs when insured individuals reduce their effort to prevent losses because the insurance shields them from the full financial consequences of the loss.

• dp/de -> the large this term, more effective is the prevention

• de/da -> the larger this term, more moral hazard

• the greater a, greater coverage

• Families were randomly assigned to different coinsurance levels/fee for service

• Results

  • More Cost Sharing reduced

    • Medical Spending

    • Medical and hospital visits

    • visits, but not cost of care

• Poor individuals got covered full, while others not

• Necessary and unnecessary care were. increased

It is a dynamic system with independent economic actors that provide products or services that together represents a coherent solution

• Growth

• Network effects

• Added value through synergies

• Customer loyalty

• Enabler

  • Supports realizer and orchester

• Realizer

  • Porducts or service are offered fpr B2C

• Orchester

  • Offers product or service from realizer via B2C plattform

• Generate relevance for customer

• Its about creating a postive experience