Adverse Selection in Crop Insurance: Actuarial and Asymmetric Information Incentives
利用全美玉米和大豆的农场级数据，分解农户参与多重风险农作物保险的激励因素，发现风险规避激励很小，农户主要因补贴或逆向选择机会而参保。
Abstract Adverse selection is often blamed for crop insurance indemnities exceeding premiums plus subsidies. However, nationwide empirical evidence has been lacking or based on inadequate county‐level data. This article uses nationwide farm‐level data on corn and soybeans to decompose incentives for participation in U.S. multiple peril crop insurance into a risk‐aversion incentive (the conventional justification for insurance), an actuarial or subsidy incentive (reflecting government subsidization), and an asymmetric information incentive (which reflects farmers' information advantage). Results show that the risk‐aversion incentive is small. Farmers participate in crop insurance primarily to receive the subsidy or because of adverse selection possibilities.