The welfare cost of unpriced heterogeneity in insurance markets
研究了保险市场中因私人信息或监管限制导致保险公司无法按预期成本定价时产生的福利损失，并提出用调查数据衡量该损失的方法，应用于美国长期护理和补充医疗保险市场发现效率损失显著。
We consider the welfare loss of unpriced heterogeneity in insurance markets, which results when private information or regulatory constraints prevent insurance companies to set premiums reflecting expected costs. We propose a methodology which uses survey data to measure this welfare loss. After identifying some “types” which determine expected risk and insurance demand, we derive the key factors defining the demand and cost functions in each market induced by these unobservable types. These are used to quantify the efficiency costs of unpriced heterogeneity. We apply our methods to the US Long‐Term Care and Medigap insurance markets, where we find that unpriced heterogeneity causes substantial inefficiency.