The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance

Equilibria in Health Exchanges: Adverse Selection versus Reclassification Risk

“…An interesting question is the extent to which longer-term contracts can serve to reduce reclassification risk. While these kinds of contracts have been discussed to some extent (Hendel and Lizzeri (2003), Crocker and Moran (2003), Herring and Pauly (2006)), there has been little to no empirical analysis of the benefits of such contracts. This seems an interesting direction for future research.…”

“…Herring and Pauly (2006) studied guaranteed renewable premiums and the extent to which they effectively protect consumers from reclassification risk. Hendel and Lizzeri (2003) and Finkelstein, McGarry, and Sufi (2005) studied dynamic insurance contracts with one-sided commitment, while Koch (2011) studied pricing regulations based on age from an efficiency perspective. Bundorf, Levin, and Mahoney (2012), while focusing on a static marketplace, also analyzed reclassification risk in an employer setting using a two-year time horizon and subsidy and pricing regulations relevant to their large employer context.…”

Testing for Adverse Selection in Insurance Markets

“…Studying the life insurance market, Hendel and Lizzeri (2003) provide strong evidence of the existence and significance of learning over time. Their focus is on symmetric learning, in which both policyholders and insurers gradually gain new information about the policyholder's risk of mortality.…”

Adverse Selection and Moral Hazard in Insurance: Can Dynamic Data Help to Distinguish?

“…Under moral hazard, this results in a form 2. Pueltz and Snow (1994), Dionne and Vanasse (1992), Salanié (1997, 2000), Dionne, Gouriéroux, and Vanasse (1997), Richaudeau (1999) and Dionne et al (2001), to name only a few, analyze automobile insurance contracts, while Holly et al (1998), Chiappori, Durand, and Geoffard (1998), Chiappori, Geoffard, and Kyriadizou (1998, Cardon and Hendel (1998) and Hendel and Lizzeri (1999) use health or life insurance data, and Poterba and Finkelstein (2003) consider annuity contracts. 3.…”