Book ChapterDOI
Market Insurance, Self-Insurance, and Self-Protection
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In this article, the authors develop a theory of demand for insurance that emphasizes the interaction between market insurance, self-insurance, and self-protection, and show that under certain conditions the latter may lead to a reduction in the probabilities of hazardous events.Abstract:
The article develops a theory of demand for insurance that emphasizes the interaction between market insurance, “self-insurance,” and “self-protection.” The effects of changes in “prices,” income, and other variables on the demand for these alternative forms of insurance are alalyzed using the “state preference” approach to behavior under uncertainty. Market insurance and self-insurance are shown to be substitutes, but market insurance and self-protection can be complements. The analysis challenges the notion that “moral hazard” is an inevitable consequence of market insurance, by showing that under certain conditions the latter may lead to a reduction in the probabilities of hazardous events.read more
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Journal ArticleDOI
Participation in Illegitimate Activities: A Theoretical and Empirical Investigation
TL;DR: In this article, a theory of participation in illegitimate activities is developed and tested against data on variations in index crimes across states in the United States and behavioral implications are derived using the state preference approach to behavior under uncertainty.
Book
Equality of Opportunity
TL;DR: The modern formulation of equality of opportunity emerges from discussions in political philosophy from the second half of the twentieth century beginning with Rawls (1971) and Dworkin, 1981a, DworkIN, 1981b,.
Journal ArticleDOI
The Effects of Automobile Safety Regulation
TL;DR: In this paper, the authors imply that annual highway deaths would be 20 percent greater without legally mandated installation of various safety devices on automobiles, but this literature ignores the fact that safety devices can be installed in cars.
Book ChapterDOI
On the Corporate Demand for Insurance
David Mayers,Clifford W. Smith +1 more
TL;DR: The Insurance Information Institute reported that business insurance accounted for approximately 54.2 percent of the $79, 032,923,000 in direct property and liability insurance premiums written in the United States in 1978 as mentioned in this paper.
Journal ArticleDOI
Economic Foundations of Cost-Effectiveness Analysis
TL;DR: It is shown how a cost-effectiveness criterion can be derived to guide resource allocation decisions, and how it varies with age, gender, income level, and risk aversion.
References
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Posted Content
Economic Welfare and the Allocation of Resources for Invention
TL;DR: In this paper, the determination of optimal resource allocation for invention will depend on the technological characteristics of the invention process and the nature of the market for knowledge, which is interpreted broadly as the production of knowledge.
Journal ArticleDOI
Risk Aversion in the Small and in the Large
TL;DR: In this article, a measure of risk aversion in the small, the risk premium or insurance premium for an arbitrary risk, and a natural concept of decreasing risk aversion are discussed and related to one another.
Journal ArticleDOI
Aspects of the theory of risk-bearing
Book ChapterDOI
The Role of Securities in the Optimal Allocation of Risk-bearing
TL;DR: In this article, an extension of the theory of the optimal allocation of resources under conditions of certainty is presented, and an extension to conditions of subjective uncertainty is considered, where the authors consider an optimal allocation under subjective uncertainty.
Book ChapterDOI
Information and Efficiency: Another Viewpoint.
TL;DR: In this paper, the authors focus on the problem of efficiently allocating resources to the production of information and examine the mistakes and the vagueness associated with this approach, which is a critique of Arrow's analysis.