TY  - JOUR
AU  - Cohen,Alma
AU  - Siegelman,Peter
TI  - Testing for Adverse Selection in Insurance Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 15586
PY  - 2009
Y2  - December 2009
UR  - http://www.nber.org/papers/w15586
L1  - http://www.nber.org/papers/w15586.pdf
N1  - Author contact info:
Alma Cohen
The Eitan Berglas School of Economics
Tel Aviv University
Ramat-Aviv, Tel-Aviv
ISRAEL
Tel: 011-972-3-640-993
E-Mail: almac@post.tau.ac.il

Peter Siegelman
46 Orchard St
Amherst MA 01002
Tel: 413.256.6131
E-Mail: peter.siegelman@law.uconn.edu
AB  - This paper reviews and evaluates the empirical literature on adverse selection in insurance markets. We focus on empirical work that seeks to test the basic coverage–risk prediction of adverse selection theory—that is, that policyholders who purchase more insurance coverage tend to be riskier. The analysis of this body of work, we argue, indicates that whether such a correlation exists varies across insurance markets and pools of insurance policies. We discuss various reasons why a coverage–risk correlation may be found in some pools of insurance policies but not in others. We also review the work on the disentangling of adverse selection and moral hazard and on learning by policyholders and insurers.
ER  -