The disentanglement of adverse selection from ex ante moral hazard remains an empirical challenge. Our comment dissects a natural experiment proposed by Chiappori and Salanié (2000) to test for ex ante moral hazard. Firstly, we argue that their test, as proposed, is too simple and too general to enable reliable inferences about the existence of ex ante moral hazard to be drawn and the reported negative coefficient does not rule out moral hazard. Secondly, their analysis strongly suggests that their proposed instrument (inherited bonus malus) is endogenously determined and therefore does not satisfy the technical requirements of a natural experiment.

Rowell, D., Nghiem, S.H., Connelly, L.B. (2017). Testing for asymmetric information in insurance markets: A test for ex ante moral hazard revisited. ECONOMICS LETTERS, 150, 4-5 [10.1016/j.econlet.2016.10.044].

Testing for asymmetric information in insurance markets: A test for ex ante moral hazard revisited

Connelly, Luke B.
2017

Abstract

The disentanglement of adverse selection from ex ante moral hazard remains an empirical challenge. Our comment dissects a natural experiment proposed by Chiappori and Salanié (2000) to test for ex ante moral hazard. Firstly, we argue that their test, as proposed, is too simple and too general to enable reliable inferences about the existence of ex ante moral hazard to be drawn and the reported negative coefficient does not rule out moral hazard. Secondly, their analysis strongly suggests that their proposed instrument (inherited bonus malus) is endogenously determined and therefore does not satisfy the technical requirements of a natural experiment.
2017
Rowell, D., Nghiem, S.H., Connelly, L.B. (2017). Testing for asymmetric information in insurance markets: A test for ex ante moral hazard revisited. ECONOMICS LETTERS, 150, 4-5 [10.1016/j.econlet.2016.10.044].
Rowell, David; Nghiem, Son Hong; Connelly, LUKE BRIAN
File in questo prodotto:
Eventuali allegati, non sono esposti

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/610914
 Attenzione

Attenzione! I dati visualizzati non sono stati sottoposti a validazione da parte dell'ateneo

Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 0
  • ???jsp.display-item.citation.isi??? 0
social impact