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Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information

  • Michael Rothschild
  • Joseph Stiglitz
Part of the Huebner International Series on Risk, Insurance and Economic Security book series (HSRI, volume 14)

Abstract

Economic theorists traditionally banish discussions of information to footnotes. Serious consideration of costs of communication, imperfect knowledge, and the like would, it is believed, complicate without informing. This paper, which analyzes competitive markets in which the characteristics of the commodities exchanged are not fully known to at least one of the parties to the transaction, suggests that this comforting myth is false. Some of the most important conclusions of economic theory are not robust to considerations of imperfect information.

Keywords

Insurance Market Price Competition Expected Profit Competitive Equilibrium Insurance Contract 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 1976

Authors and Affiliations

  • Michael Rothschild
    • 1
    • 2
  • Joseph Stiglitz
    • 1
    • 2
  1. 1.University of WisconsinMadisonUSA
  2. 2.Stanford University and All Souls CollegeOxfordUK

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