Lunch Seminar: Pierre PICARD
We characterize the design of insurance schemes when policyholders face several insurable risks in a context of adverse selection. Splitting risks emerges as a feature of second-best Pareto-optimal allocations. This may take the form of risk-specific contracts, or of contracts where risks are bundled, but subject to differential coverage rules such as risk specific copayments, combined with a deductible, an out-of-pocket maximum or a cap on coverage.
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