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Optimal Insurance Brokerage Commission, Arthur Hau
Optimal Insurance Brokerage Commission, Arthur Hau
Hong Kong Institute of Business Studies Working Paper Series
This paper studies a principal-agent insurance brokerage problem with a risk-averse principal (an insured) and a risk-neutral agent(a broker). The concept of “mean-preserving spread-reducing effort” is introduced to delineate the broker's activities. Using the first-order approach, it is shown that under some common conditions, the insured may “concavify” the reward function to induce the risk-neutral agent to exert MPSR brokering effort. Surprisingly, these conditions together with an additional condition guarantee the validity of the first-order approach even when the monotone likelihood ratio condition (used exclusively to justify the first-order approach) is violated. The case with a risk-averse agent is also …
Reducing Moral Hazard In Deposit Insurance : A Policy Instrument For Generating Regulatory Information, Chengze, Simon Fan
Reducing Moral Hazard In Deposit Insurance : A Policy Instrument For Generating Regulatory Information, Chengze, Simon Fan
Centre for Public Policy Studies : CPPS Working Paper Series
No abstract provided.