Lemons or Cherries? Asymmetric Information in the German Private Long-term Care Insurance Market

Selection Behavior in the Market for Private Complementary Long-Term Care Insurance in Germany

“…This finding is consistent with Browne and Zhou-Richter (2014), who find the preference for insurance to be a source of advantageous selection.…”

“…By examining potential unused observables in a manner similar to Finkelstein and Poterba (2014), we seek to answer a second research question related to the drivers of selection effects in this market. Based on previous findings (e.g., Browne and Zhou-Richter 2014;Fang, Keane, and Silverman 2008;Finkelstein and McGarry 2006), our hypothesis is that asymmetrically used information about preferences for insurance coverage and aspects of socioeconomic status, such as education or income, contribute to selection effects in this market.…”

Choice in Insurance Markets: A Pigouvian Approach to Social Insurance Design

“…g One notable exception is , finding no evidence of adverse selection in the Texan workers' compensation market. h Most research points towards the presence of risk-based selection (Sloan and Norton 1997;Finkelstein et al 2005;Finkelstein and McGarry 2006;Hendren 2013;Browne and Zhou-Richter 2014;Boyer et al 2017). See also Zick et al (2005) and Oster et al (2010) linking it to genetic testing.…”

The role of heterogeneous parameters for the detection of selection in insurance contracts

“…Furthermore, they do not allow us to distinguish between adverse selection and moral hazard (e.g. Finkelstein and Poterba, 2014;Browne and Zhou-Richter, 2014), although this distinction is beyond the scope of this study. Our contribution is mainly a technical one, discussing whether the findings of empirical methods that apply variables which are not used by insurance companies for underwriting purposes can be used to test if such a variable is affecting the risk pool in a positive or negative way.…”

“…This approach has been fruitfully applied by several studies that used different markers for selection in insurance markets. Examples of such sources of selection include a variety of factors such as preferences (Finkelstein and McGarry, 2006;Cutler et al, 2008;Bauer et al, 2017), cognitive abilities (Fang et al, 2008), variables that reflect the economic situation, such as financial wealth or education (Bolhaar et al, 2012;Gao et al, 2009;Buchmueller et al, 2013;Browne and Zhou-Richter, 2014) and place of residence (Finkelstein and Poterba, 2014;Bauer et al, 2017).…”