Journal
JOURNAL OF RISK AND INSURANCE
Volume 71, Issue 2, Pages 253-264Publisher
BLACKWELL PUBL LTD
DOI: 10.1111/j.0022-4367.2004.00088.x
Keywords
-
Categories
Ask authors/readers for more resources
The demand for insurance is examined when the indemnity schedule is subject to an upper limit. The optimal contract is shown to display full insurance above a deductible up to the cap. Some results derived in the standard model with no upper limit on coverage turn out to be invalid; the optimal deductible of an actuarially fair policy is positive and insurance may be a normal good under decreasing absolute risk aversion. An increase in the upper limit would induce the policyholder with constant absolute risk aversion to reduce his or her optimal deductible and therefore this would increase the demand for insurance against small losses.
Authors
I am an author on this paper
Click your name to claim this paper and add it to your profile.
Reviews
Recommended
No Data Available