Dynamic consistency of insurance contracts under enforcement by exclusion

Taub, B. (1989) Dynamic consistency of insurance contracts under enforcement by exclusion. Journal of Economic Dynamics and Control, 13(1), pp. 93-112. (doi: 10.1016/0165-1889(89)90013-4)

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An insurance institution offsets individual income shocks with a contract that takes advantage of the cross-sectional heterogeneity of the shocks. Individuals with temporarily high incomes will wish to avoid the redistributive taxes imposed by the contract; these individuals are permitted to defect, but at the cost of forsaking all future benefits. Operator methods like those in Whiteman (1985) characterize the conditions under which on defection will occur. If the contract is identified with redistributive government programs, the central conclusion is that such contracts will be associated with high-income, advanced economies.

Item Type:Articles
Glasgow Author(s) Enlighten ID:Taub, Professor Bart
Authors: Taub, B.
College/School:College of Social Sciences > Adam Smith Business School > Economics
Journal Name:Journal of Economic Dynamics and Control

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