Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data

Jaap Abbring, Pierre-André Chiappori, Tibor Zavadil

Research output: Working paperProfessional

Abstract

This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard.
Original languageEnglish
Place of PublicationAmsterdam
PublisherTinbergen Instituut
Publication statusPublished - 2008

Publication series

NameDiscussion paper TI
No.08-075/3

Fingerprint

Ex post moral hazard
Insurance
Moral hazard
Experience rating
Incentives
Car
Micro data

Cite this

Abbring, J., Chiappori, P-A., & Zavadil, T. (2008). Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. (Discussion paper TI; No. 08-075/3). Amsterdam: Tinbergen Instituut.
Abbring, Jaap ; Chiappori, Pierre-André ; Zavadil, Tibor. / Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; 08-075/3).
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Abbring, J, Chiappori, P-A & Zavadil, T 2008 'Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data' Discussion paper TI, no. 08-075/3, Tinbergen Instituut, Amsterdam.

Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. / Abbring, Jaap; Chiappori, Pierre-André; Zavadil, Tibor.

Amsterdam : Tinbergen Instituut, 2008. (Discussion paper TI; No. 08-075/3).

Research output: Working paperProfessional

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T1 - Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data

AU - Abbring, Jaap

AU - Chiappori, Pierre-André

AU - Zavadil, Tibor

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N2 - This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard.

AB - This paper empirically analyzes moral hazard in car insurance using a dynamic theory of an insuree's dynamic risk (ex ante moral hazard) and claim (ex post moral hazard) choices and Dutch longitudinal micro data. We use the theory to characterize the heterogeneous dynamic changes in incentives to avoid claims that are generated by the Dutch experience-rating scheme, and their effects on claim times and sizes under moral hazard. We develop tests that exploit these structural implications of moral hazard and experience rating. Unlike much of the earlier literature, we find evidence of moral hazard.

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BT - Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data

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Abbring J, Chiappori P-A, Zavadil T. Better Safe than Sorry? Ex Ante and Ex Post Moral Hazard in Dynamic Insurance Data. Amsterdam: Tinbergen Instituut. 2008. (Discussion paper TI; 08-075/3).