2003•Journal of Chongqing Technology and Business UniversityRequires access
Optimal insurance contracts under particular moral hazard
Jiang Yong
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Abstract
This paper employs the principal-agent to research the optimal insurance contracts under particular moral hazard where private action of the insurance only influence the probability of the accident. We construct principal-agent models for the moral hazard. The model illustrates the most fundamental result: the market responds to the moral hazard with partial insurance coverage, and the final loss suffered by insured individuals is indifferent with the total loss aroused by the accidents, through the insurance policy we could gain the Parito-optimal risk sharing.