TEST OF ASYMMETRIC INFORMATION IN THE AUTOMOBILE INSURANCE INDUSTRY OF IRAN

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KESHAVARZ HADDAD GHOLAMREZA; AMIRKHANLOO MONIREH

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Journal: Journal of Economic Studies and Policies Year:2012 | Volume:7 (17) | Issue:2 (87) Page(s): 131-158

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Title

TEST OF ASYMMETRIC INFORMATION IN THE AUTOMOBILE INSURANCE INDUSTRY OF IRAN

Author(s)

KESHAVARZ HADDAD GHOLAMREZA | AMIRKHANLOO MONIREH | Issue Writer Certificate

Keywords

AUTOMOBILE INSURANCEQ2

CONTRACT THEORYQ2

ASYMMETRIC INFORMATIONQ2

ADVERSE SELECTIONQ1

MORAL HAZARDQ1

NONPARAMETRIC INFERENCEQ2

Abstract

Classical theory of ASYMMETRIC INFORMATION predicts a positive correlation between risk and insurance coverage. Using a sample of 69553 policyholders in Iran Insurance Company with optional items in the car’s body insurance contract, which provides significant and relevant information on the preferences of costumers, this research intends to test the prediction. Statistical tests have been conducted by the conditional independence Bivariate Probit model and Nonparametric Statistics which have been pioneered in Chiappori and Salanie (2000) and Chiappori et al (2006).The distinctive feature of the research is the use of individual data of policyholders in the oligopolistic Iran’s Insurance market. Our findings confirm realistic expectation and positive correlation in Iran’s AUTOMOBILE INSURANCE Market (IAIM), which indicates a strict evidence of ADVERSE SELECTION or MORAL HAZARD in the market. These results imply inefficiency in IAIM and the existence of informationally inconsistent insurance contracts in the insurance industry of Iran.

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APA: Copy

KESHAVARZ HADDAD, GHOLAMREZA, & AMIRKHANLOO, MONIREH. (2012). TEST OF ASYMMETRIC INFORMATION IN THE AUTOMOBILE INSURANCE INDUSTRY OF IRAN. JOURNAL OF ECONOMIC STUDIES AND POLICIES, 7 (17)(2 (87)), 131-158. SID. https://sid.ir/paper/219089/en

Vancouver: Copy

KESHAVARZ HADDAD GHOLAMREZA, AMIRKHANLOO MONIREH. TEST OF ASYMMETRIC INFORMATION IN THE AUTOMOBILE INSURANCE INDUSTRY OF IRAN. JOURNAL OF ECONOMIC STUDIES AND POLICIES[Internet]. 2012;7 (17)(2 (87)):131-158. Available from: https://sid.ir/paper/219089/en

IEEE: Copy

GHOLAMREZA KESHAVARZ HADDAD, and MONIREH AMIRKHANLOO, “TEST OF ASYMMETRIC INFORMATION IN THE AUTOMOBILE INSURANCE INDUSTRY OF IRAN,” JOURNAL OF ECONOMIC STUDIES AND POLICIES, vol. 7 (17), no. 2 (87), pp. 131–158, 2012, [Online]. Available: https://sid.ir/paper/219089/en

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