The Geneva Risk and Insurance Review

, Volume 40, Issue 2, pp 171–193

Liability, Insurance and the Incentive to Obtain Information about Risk

  • Vickie Bajtelsmit
  • Paul Thistle
Article

DOI: 10.1057/grir.2014.17

Cite this article as:
Bajtelsmit, V. & Thistle, P. Geneva Risk Insur Rev (2015) 40: 171. doi:10.1057/grir.2014.17

Abstract

We examine the incentives to obtain information about risk under strict liability and negligence rules when insurance is available. Information helps reduce the expected cost of accidents, but also exposes the potential injurer to classification risk. As a result, the social value of information may be negative. Under both strict liability and negligence, the private value of information may also be negative when insurance is available.

Keywords

information tort moral hazard 

Copyright information

© The International Association for the Study of Insurance Economics 2014

Authors and Affiliations

  • Vickie Bajtelsmit
    • 1
  • Paul Thistle
    • 2
  1. 1.Department of Finance and Real EstateColorado State UniversityFt. CollinsU.S.A.
  2. 2.Department of FinanceUniversity of Nevada Las VegasLas VegasU.S.A.