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Title:
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Cream Skimming, Dregs Skimming, and Pooling
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|
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On the Dynamics of Competitive Screening |
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Author:
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Lund, Diderik; Nilssen, Tore |
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Abstract:
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Abstract
We discuss the existence of a pooling equilibrium in a two-period model
of an insurance market with asymmetric information. We solve the model
numerically. We pay particular attention to the reasons for non-existence
in cases where no pooling equilibrium exists. In addition to the phenom-
enon of cream skimming emphasized in earlier literature, we here point
to the the importance of the opposite: dregs skimming, whereby high-risk
consumers are proÞtably detracted from the candidate pooling contract. |
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URI:
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http://hdl.handle.net/10398/7596
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Date:
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2003-10-21 |
This work is licensed under a Creative Commons License.
