CROP INSURANCE: THE RELATIONSHIP BETWEEN INDEMNITY PRICE AND EXPECTED OUTPUT PRICE
研究了农作物保险合同中赔偿价格上限低于预期产出价格的约束条件，通过数值模拟发现最优价格选择往往被预期产出价格从下方限制，且产出价格波动增加时最优价格通常不增。
Crop insurance contracts typically constrain the choice of price at which indemnification occurs to be less than the expected output price. This restriction is first analysed assuming only risk‐averse farmers, and yield and price uncertainty. General conditions under which the optimal price selection is bounded above by the expected output price are found to be difficult to derive. The results of numerical simulations based on a range of different utility functional forms are presented, and a strong tendency is observed for the optimal price selection to be bounded from below by the expected output price. The effect of increasing output price variability on the optimal price selection is also considered. The simulation results suggest that the optimal price selection is often non‐increasing with a mean‐preserving spread of the output price distribution. Lastly, it is noted that even in the presence of hidden‐action moral hazard, if the incentives for shirking are not too high, the constraint that price selections be lower than the expected output price may still be binding.