Repeated insurance contracts and moral hazard

Ariel Rubinstein; Menahem E. Yaari

doi:10.1016/0022-0531(83)90094-7

Repeated insurance contracts and moral hazard

Ariel Rubinstein, Menahem E. Yaari

Research output: Contribution to journal › Article › peer-review

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 language	English
Pages (from-to)	74-97
Number of pages	24
Journal	Journal of Economic Theory
Volume	30
Issue number	1
DOIs	https://doi.org/10.1016/0022-0531(83)90094-7
State	Published - Jun 1983
Externally published	Yes

Bibliographical note

Funding Information:
* An earlier version of this paper was presented in April of 1979 at a conference on Economics of Uncertainty in honor of Karl Borch. We are indebted to Robert J. Aumann, Abraham Neyman, Roy Radner, and to an anonymous referee for their comments. Financial support from the U.S.-Israel Binational Science Foundation is gratefully acknowledged.

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10.1016/0022-0531(83)90094-7

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Repeated insurance contracts and moral hazard

Abstract

Bibliographical note

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