Resource title

Self-protection and insurance with interdependencies

Resource image

Resource description

We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling at-fault insurance can partially internalize this externality and thereby improve individual and social welfare.

Resource author

Howard Kunreuther, Alexander Muermann

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25523

Resource license

Adapt according to the presented license agreement and reference the original author.