Adverse Selection and Consumer Behavior in the Viatical Settlement Market
Abstract/Contents
- Abstract
- The similarities between the viatical settlement market and the standard market for insurance evoke the question of what effect asymmetric information, an oft discussed topic surrounding standard markets, might have in the viatical settlement market. In order to examine the possibility of the existence of adverse selection in this market, as well as to gain a better understanding of the dynamics of the market in general, I analyze a model describing consumer behavior in this market. Applying the results of my analysis to the logic of a classic adverse selection model, I develop and implement a test of adverse selection in the viatical settlement market using nationally representative data on viatical transactions. Additionally, I extract a new prediction from the consumer behavior model relating the probability of selling life insurance to both the policy’s face value and the policyholder’s mortality risk, and I test this prediction against data on HIV+ individuals. In the end I find that there is no empirical evidence for adverse selection in the viatical settlement market, and that the consumer behavior model is largely consistent with the data.
Description
Type of resource | text |
---|---|
Date created | May 2007 |
Creators/Contributors
Author | Dizon-Ross, Elise | |
---|---|---|
Primary advisor | Bhattacharya, Jay | |
Degree granting institution | Stanford University, Department of Economics |
Subjects
Subject | Stanford Department of Economics |
---|---|
Subject | life insurance |
Subject | mortality risk |
Subject | Rothschild Stiglitz model |
Subject | asymmetric information |
Genre | Thesis |
Bibliographic information
Access conditions
- Use and reproduction
- User agrees that, where applicable, content will not be used to identify or to otherwise infringe the privacy or confidentiality rights of individuals. Content distributed via the Stanford Digital Repository may be subject to additional license and use restrictions applied by the depositor.
Preferred citation
- Preferred Citation
- Dizon-Ross, Elise. (2007). Adverse Selection and Consumer Behavior in the Viatical Settlement Market. Stanford Digital Repository. Available at: https://purl.stanford.edu/rp510cc1204
Collection
Stanford University, Department of Economics, Honors Theses
View other items in this collection in SearchWorksContact information
- Contact
- econ@stanford.edu
Also listed in
Loading usage metrics...