Insurance design and arson-type risks

HIGHLIGHTS

• What: The authors design the insurance contract when the insurer faces arson-type risks. The authors show that the optimal contract must be manipulation-proof. Any contract that mixes deductible coinsurance and an upper limit is manipulation-proof. key feature of the models is that the authors provide simple general and entirely elementary proof of manipulation-proofness that is easily adapted to different settings. The model provides a simple, formal counterpart to such an argument.
• Who: O R, I G and Jean-Gabriel, Lauzier from the Department of Economics, Memorial University of Newfoundland, StJohn`s . . .
  

   

  

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