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Time Deductibles as Screening Devices: Competitive Markets

Spreeuw, J. & Karlsson, M. (2009). Time Deductibles as Screening Devices: Competitive Markets. Journal Of Risk And Insurance, 76(2), pp. 261-278. doi: 10.1111/j.1539-6975.2009.01298.x


Seminal papers on asymmetric information in competitive insurance markets, analysing the monetary deductible as a screening device, show that any existing equilibrium is of a separating type. High risks buy complete insurance whilst low risks buy partial insurance - and this result holds for Nash behaviour as well as for Wilson foresight. In this paper, we analyze the strength of screening based on limitations to the period of coverage of the contract. We show that in this case a) the Nash equilibrium may entail low risks purchasing any insurance at all and b) under Wilson foresight, a pooling equilibrium may exist.

Publication Type: Article
Additional Information: This is the accepted version of the following article: Spreeuw, J. and Karlsson, M. (2009), Time Deductibles as Screening Devices: Competitive Markets. Journal of Risk and Insurance, 76: 261–278., which has been published in final form at
Publisher Keywords: time deductibles, adverse selection, Nash equilibrium, Wilson foresight
Subjects: H Social Sciences > HG Finance
Departments: Bayes Business School > Actuarial Science & Insurance
Related URLs:
SWORD Depositor:
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