Hidden insurance in a moral‐hazard economy
研究竞争性保险行业在非排他性服务下的一般均衡，发现均衡因无法控制道德风险而低效，提高保险价格可改善福利，并分析了保险成本与道德风险如何共同导致低效。
We analyze the general equilibrium of an economy in which a competitive industry produces nonexclusive insurance services. The equilibrium is inefficient because insurance contracts cannot control moral hazard, and welfare can be improved by policies that reduce insurance by increasing its price above marginal cost. We discuss how insurance production costs that exceed expected claim payments interact with moral hazard in determining the equilibrium's inefficiency, and show that these costs can make insurance premia so actuarially unfair as to validate the standard first‐order conditions we exploit in our analysis.