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Overconfidence, Insurance and Paternalism

Sandroni, Alvaro and Squintani, Francesco (2007) Overconfidence, Insurance and Paternalism. Working Paper. University of Essex, Department of Economics, Economics Discussion Papers, Colchester.

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Abstract

It is well known that when agents are fully rational, compulsory public insurance may make all agents better off in the Rothschild and Stiglitz (1976) model of insurance markets. We find that when sufficiently many agents underestimate their personal risks, compulsory insurance makes low-risk agents worse off. Hence, behavioral biases may weaken some of the well-established rationales for government intervention based on asymmetric information.

Item Type: Monograph (Working Paper)
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Users 161 not found.
Date Deposited: 28 Aug 2014 11:41
Last Modified: 28 Aug 2014 11:41
URI: http://repository.essex.ac.uk/id/eprint/8914

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