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Title: The Empirical Measure of Information Problems with Emphasis on Insurance Fraud and Dynamic Data
Authors: Dionne, Georges
Keywords: Empirical measure
Information problem
Moral hazard
Adverse selection
Insurance fraud
Causality tests
Dynamic data
Issue Date: 2012-08
Series/Report no.: Cahiers du CIRPÉE;12-33
Abstract: We discuss the difficult question of measuring the effects of asymmetric information problems on resource allocation. Three problems are examined: moral hazard, adverse selection, and asymmetric learning. One theoretical conclusion, drawn by many authors, is that information problems may introduce significant distortions into the economy. However, we verify, in different markets, that efficient mechanisms have been introduced in order to reduce these distortions and even eliminate, at the margin, some residual information problems. This conclusion is stronger for pure adverse selection. One explanation is that adverse selection is related to exogenous characteristics, while asymmetric learning and moral hazard are due to endogenous actions that may change at any point in time. Dynamic data help to identify the three information problems by permitting causality tests.
Appears in Collections:Cahiers de recherche du CIRPÉE

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