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AuthorBenlagha, Noureddine
AuthorKaraa, Imen
Available date2023-01-18T08:39:01Z
Publication Date2017
Publication NameCogent Economics and Finance
ResourceScopus
URIhttp://dx.doi.org/10.1080/23322039.2017.1330303
URIhttp://hdl.handle.net/10576/38555
AbstractThe present paper investigates the adverse selection problem by examining the relationship between accident occurrences and deductible choice utilizing a seemingly unrelated probit model that allows for best controls for unobserved heterogeneity and endogeneity. While this microeconometric analysis does not consider a multivariate model and considers only two types of contracts, namely, those with high and low deductibles, it does suggest important implications from applying a recursive bivariate probit. We employ new cross-sectional data on a Tunisian insurance portfolio containing 31,125 policyholders. The results support some evidence for residual adverse selection in the studied insurance portfolio. Moreover, the results suggest the presence of a wealth effect in the decision of the contract choice. 2017 The Author(s). This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license.
Languageen
PublisherCogent OA
Subjectadverse selection
car insurance
endogeneity
seemingly unrelated probit
TitleEvidence of adverse selection in automobile insurance market: A seemingly unrelated probit modelling
TypeArticle
Issue Number1
Volume Number5
dc.accessType Open Access


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