Optimal risk sharing
Working paper
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Date
2003-01Metadata
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- Discussion papers (FOR) [566]
Abstract
Optimal risk sharing is considered from the perspective of the risk sharing model introduced by Karl Borch in the late 50ies.
First we introduce, in a modern setting, the main concepts from this theory. These we apply on the risk sharing problem between an insurer and an insurance customer. We motivate the development through a simple example, illustrating some fine points of this theory.
In order to explain deductibles, we separately introduce (i) costs, and (ii) moral hazard in the neoclassical model , the latter case also illustrated by an example.
Publisher
Norwegian School of Economics and Business Administration. Department of Finance and Management ScienceSeries
Discussion paper2003:2