| 来源类型 | Working Paper
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| 规范类型 | 报告
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| DOI | 10.3386/w23286
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| 来源ID | Working Paper 23286
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| Life Insurance and Life Settlement Markets with Overconfident Policyholders |
| Hanming Fang; Zenan Wu
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| 发表日期 | 2017-03-27
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| 出版年 | 2017
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| 语种 | 英语
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| 摘要 | We analyze how the life settlement market – the secondary market for life insurance – may affect consumer welfare in a dynamic equilibrium model of life insurance with one-sided commitment and overconfident policyholders. As in Daily et al. (2008) and Fang and Kung (2010), policyholders may lapse their life insurance policies when they lose their bequest motives; but in our model the policyholders may underestimate their probability of losing their bequest motive, or be overconfident about their future mortality risks. For the case of overconfidence with respect to bequest motives, we show that in the absence of life settlement overconfident consumers may buy “too much” reclassification risk insurance for later periods in the competitive equilibrium. In contrast, when consumers are overconfident about their future mortality rates in the sense that they put too high a subjective probability on the low-mortality state, the competitive equilibrium contract in the absence of life settlement exploits the consumer bias by offering them very high face amounts only in the low-mortality state. In both cases, life settlement market can impose a discipline on the extent to which overconfident consumers can be exploited by the primary insurers. We show that life settlement may increase the equilibrium consumer welfare of overconfident consumers when they are sufficiently vulnerable in the sense that they have a sufficiently large intertemporal elasticity of substitution of consumption. |
| 主题 | Microeconomics
; Behavioral Economics
; Economics of Information
; Financial Economics
; Financial Institutions
; Industrial Organization
; Market Structure and Firm Performance
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| URL | https://www.nber.org/papers/w23286
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| 来源智库 | National Bureau of Economic Research (United States)
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| 引用统计 |
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| 资源类型 | 智库出版物
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| 条目标识符 | http://119.78.100.153/handle/2XGU8XDN/580960
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推荐引用方式
GB/T 7714 |
Hanming Fang,Zenan Wu. Life Insurance and Life Settlement Markets with Overconfident Policyholders. 2017.
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文件名：
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w23286.pdf
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格式：
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Adobe PDF
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