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Self‐Insurance and Self‐Protection as Public Goods
Author(s) -
Lohse Tim,
Robledo Julio R.,
Schmidt Ulrich
Publication year - 2012
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.1539-6975.2010.01391.x
Subject(s) - public good , business , nash equilibrium , auto insurance risk selection , key person insurance , insurance policy , casualty insurance , group insurance , actuarial science , general insurance , public economics , microeconomics , economics , income protection insurance
Many public goods provide utility by insuring against hazardous events. Those public goods can have self‐insurance and self‐protection character. For both situations we analyze the efficient public provision level and the provision level resulting from Nash behavior in a private provision game. We consider the interaction of public goods as insurance devices with market insurance. The availability of market insurance reduces the provision level of the public good for both public and private provision, regardless of whether we consider self‐insurance or self‐protection. Moreover, we show that Nash behavior has always a larger impact than the availability of market insurance.