infonet-economy

Insurance contracts may fail to perform, leading to a total or partial default on valid claims. We extend models of such probabilistic insurance to allow for ambiguity in contract nonperformance risk, and derive formally that mean-preserving ambiguity reduces demand. The results of a field lab experiment are consistent with this logic. In particular, we find that a 10 percent…

Using state-of-the-art frontier efficiency methodologies, we study the efficiency and productivity of Swiss insurance companies in the life, property/casualty, and reinsurance sectors from 1997-2013. In this context, we provide the first empirical analysis of internationalization strategies of insurance companies, a topic of high interest in the business and economics literature, but…

A central matter of dispute in the internationalization literature is the existence and shape of a systematic relationship between the degree of internationalization and firm performance (I-P relationship). Considering the global insurance industry, we show that the I-P relationship depends on the industry's idiosyncrasies and on the geographical scope of internationalization.…

The purpose of this article is to structure the extant knowledge on the determinants of microinsurance demand in a manner that achieves several outcomes. First is to offer a specific economic structure to the review through use of Outreville's insurance demand framework. Second is to identify key questions that arise out of structuring the material in this way. In particular, we…

This paper demonstrates the presence of adverse selection in the group insurance market for policies that allow no individual choice. As a "conventional wisdom," group insurance mitigates adverse selection, since individual choice is minimized and group losses have less variability than individual losses. We complement this "conventional wisdom" by analyzing a…

We empirically analyze the costs and benefits of financial regulation based on a survey of 76 insurers from Austria, Germany and Switzerland. Our analysis includes both established and new empirical measures for regulatory costs and benefits. This is the first paper that tries to take costs and benefits combined into account using a latent class regression with covariates. Another…

This paper evaluates whether sophisticated or simple systemic risk measures are more suitable in identifying which institutions contribute to systemic risk. In this investigation, DCoVaR, Marginal Expected Shortfall (MES), SRISK and Granger-Causality Networks are considered as sophisticated systemic risk measures. Market capitalization, total debt, leverage, the stock market returns…

The least restrictive sufficient condition for expected utility to imply Sharpe ratio rankings is the location and scale (LS) property (see Sinn, 1983 and Meyer, 1987). The normal, the extreme value, and many other distributions commonly used in finance satisfy this property. We argue that the LS property is also sufficient for expected utility to imply drawdown-based performance…