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Risks 2016, 4(4), 38;

A Note on Health Insurance under Ex Post Moral Hazard

Department of Economics, Ecole Polytechnique, 91128 Palaiseau Cedex, France
Academic Editor: Mogens Steffensen
Received: 11 August 2016 / Revised: 12 October 2016 / Accepted: 20 October 2016 / Published: 25 October 2016
Full-Text   |   PDF [327 KB, uploaded 25 October 2016]


In the linear coinsurance problem, examined first by Mossin (1968), a higher absolute risk aversion with respect to wealth in the sense of Arrow–Pratt implies a higher optimal coinsurance rate. We show that this property does not hold for health insurance under ex post moral hazard; i.e., when illness severity cannot be observed by insurers, and policyholders decide on their health expenditures. The optimal coinsurance rate trades off a risk-sharing effect and an incentive effect, both related to risk aversion. View Full-Text
Keywords: health insurance; ex post moral hazard; coinsurance health insurance; ex post moral hazard; coinsurance
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).

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Picard, P. A Note on Health Insurance under Ex Post Moral Hazard. Risks 2016, 4, 38.

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