This paper examines transition in the level of competition in the Japanese life insurance industry over the last ten years. We estimate the first order condition for profit maximizing insurance oligopolies to obtain the degree of non-competition and collusion. Estimation results suggest: 1) mutual companies, like stock companies, seek to maximize their own profits rather than pay out dividends ...

Households’ insurance against shocks to income and asset values (that is, household risk management) is limited, especially for poor households. We argue that a trade-off between intertemporal financing needs and insurance across states explains this basic insurance pattern. In a model with limited enforcement, we show that household risk management is increasing in household net worth and inco...

The realization that mere existence of health care facilities does not necessarily mean that they are readily accessible to the poorest section in the informal economy, tend to the evolution of a unique health insurance scheme, with contribution according to individual capacity. This paper examines several health insurance schemes catering to the informal sector as well as some critical issues ...

Insurance has an intertemporal aspect as insurance premia have to be paid upfront. We argue that the financing aspect of insurance is key to understanding basic insurance patterns. In a model with limited enforcement, we show that insurance is globally monotone increasing in household net worth and income, incomplete, and precautionary. These results hold in economies with income risk, durable ...

Efforts to raise US health-care productivity have proceeded slowly, potentially due the fragmentation of payment across insurers. Each insurer’s efforts improve care could influence how doctors practice for other insurers, leading unvalued externalities. We study a randomized letter intervention by Medicare curtail overuse antipsychotics. The letters did not mention private insurance but reduce...

Abstract I find that approximately 30% of price fluctuations in the Fama-French size and value factors are nonfundamental pressures driven by correlated fund flows, which generate movements revert over time. Is this really demand-based pressure? show effects happen exclusively periods when mutual funds place trades, a fact is difficult to explain using traditional mechanisms such as unobserved ...

The Euler (or gradient) allocation technique defines a financial institution’s marginal cost of a risk exposure via calculation of the gradient of a risk measure evaluated at the institution’s current portfolio position. The technique, however, relies on an arbitrary selection of a risk measure. We reverse the sequence of this approach by calculating the marginal costs of risk exposures for a p...

We conduct a neutral-context laboratory experiment to systematically investigate the role of the hit-by-bus concern in explaining the annuitization puzzle: the low rate of retirement-asset annuitization relative to the predictions of standard models. We vary endowed asset (annuity vs. stock of wealth vs. no explicit endowment), and find a strong endowment effect. Furthermore, we find that the o...

The stochastic modeling and determination of reserves and risk capitals for variable annuity guarantee products are relatively new developments in the insurance industry. The current market practice is largely based on Monte Carlo simulations, which have great engineering flexibility but the demand for heavy computational power can be prohibitive in many cases. In this paper, we distinguish and...