The IO of selection markets

Einav, Liran; Finkelstein, Amy; Mahoney, Neale

doi:10.1016/bs.hesind.2021.11.014

Cited by 13 publications

(2 citation statements)

References 56 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…Adverse selection has distributional implications as well as efficiency implications, often harming sicker consumers more than healthier consumers. While in many contexts the actual extent of adverse selection is muted by either preference dimensions that are not directly correlated with health risk (Einav et al, 2020) or by choice frictions (Handel, 2013; Handel et al, 2019), in some employer contexts adverse selection has caused the market for some options to completely unravel (Cutler & Reber, 1998). Employers and policymakers have several policies at their disposal to mitigate adverse selection including risk‐adjustment transfers that transfer money from insurers enrolling healthy patients to those enrolling sick patients (Geruso & Layton, 2020).…”

Section: Introductionmentioning

confidence: 99%

Employer risk‐adjustment transitions with inertial consumers: Evidence from CalPERS

Handel

Hong

Hua

et al. 2023

J of Risk & Insurance

View full text Add to dashboard Cite

Risk-adjustment policies, which transfer money from insurers with healthy consumers to those with sick consumers, are an important tool to contend with adverse selection in health insurance markets. While the steady-state properties of risk-adjustment have been studied extensively, there is less evidence on the transition phase of policy implementation. We study the introduction and removal of risk-adjustment at California Public Employees' Retirement System and show that these changes meaningfully impact premiums via plan differences in enrollee health status. Despite these premium differences, there is limited consumer resorting due to consumer inertia, though new active enrollees respond more fluidly. We show that, with inertial consumers, risk-adjustment changes have substantial distributional consequences, leading to worse outcomes for sicker consumers when removed and vice-versa when implemented. We estimate a model of plan choice with premium sensitivity, brand preferences, and inertia and use these estimates to study the interaction between riskadjustment policies and the strength of inertia.

show abstract

Section: Introductionmentioning

confidence: 99%

Employer risk‐adjustment transitions with inertial consumers: Evidence from CalPERS

Handel

Hong

Hua

et al. 2023

J of Risk & Insurance

View full text Add to dashboard Cite

show abstract

“…Our analysis of wholesale markets largely takes as given the supply of funds in primary markets for corporate bonds and stocks, and abstracts from any competition between firms facilitating the creation of these securities. We mostly leave the discussion of insurance for the chapter in the present Handbook on selection markets (Einav et al (2021)). See also Koijen and Yogo (2015) and Koijen and Yogo (2016) for recent contributions on imperfect competition in life insurance markets.…”

Section: Introductionmentioning

confidence: 99%

The Industrial Organization of Financial Markets

Clark¹,

Houde²,

Kastl³

2021

View full text Add to dashboard Cite

and an anonymous reviewer for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. Clark would like to acknowledge financial support from the Stephen J.R. Smith Chair in Economic Policy at Queen's University.NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

show abstract

Frictions in product markets

Gavazza

Lizzeri

2021

Handbook of Industrial Organization

View full text Add to dashboard Cite

The IO of selection markets

Cited by 13 publications

References 56 publications

Employer risk‐adjustment transitions with inertial consumers: Evidence from CalPERS

Employer risk‐adjustment transitions with inertial consumers: Evidence from CalPERS

The Industrial Organization of Financial Markets

Frictions in product markets

Contact Info

Product

Resources

About