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Description of The Economics of Risk and Insurance

Written for advanced undergraduate and master's level courses, this book builds from a base of asymmetric information issues to discuss a wide array of topics and is illustrated with some timely examples

* Covers diverse issues such as risk aversion, expected utility, and moral hazard within the pure theory of insurance

* Provides a clear exposition of the necessary mathematics, a feature which cannot be found in readers on the topic

* Utilizes an undergraduate economics major level of math

* Uses the simplest economic models possible to keep the text intuitive

* Introduces more mathematically complex techniques such as basic optimization for students wishing to 'go further' in their analysis

Title Information

ISBN:

9781405185523

Pages:

352 pages

Format:

Hardback

Product Code:

382913

Publisher:

Wiley-Blackwell (an imprint of John Wiley & Sons Ltd)

Published:

19/02/2010

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About S.Hun Seog

S. Hun Seog is Professor of Finance and Insurance at the Graduate School of Business, Seoul National University. He received his PhD in Risk and Insurance from the Wharton School.

His research areas include the economics of risk and insurance, corporate finance, and their applications. His academic papers have been published in Journal of Risk and Insurance, Geneva Papers on Risk and Insurance Theory, Asia-Pacific Journal of Risk and Insurance, International Economic Review, Marketing Science, and European Journal of Operational Research.

Contents of The Economics of Risk and Insurance

Part I: Fundamentals of Insurance

1. Risk and Expected utility (Basic theories on risk and expected utility)

2. Risk Aversion and Riskiness (Measures of risk aversion of an individual and riskiness of a project)

3. Principles of Insurance: Risk Sharing and Transfer (Contribution of insurance: Pareto efficiency, risk transfer, mutuality principle, and law of large numbers)

Part II: Insurance Contract

4. Risk Aversion and Insurance (Insurance demand of a risk-averse individual under diverse circumstances including changes in risk aversion, effects of costs, deductibles, coinsurance, investments in loss reduction and loss prevention, and so on)

5. Corporate Risk Management and Insurance (Rationales for corporate demand for insurance other than risk aversion, including tax, agency problems, information asymmetry, strategic concerns, among others)

6. Adverse Selection (Summary of adverse selection issues in the insurance context, including diverse equilibrium outcomes under consumer-sided adverse selection, insurer-sided adverse selection, and double-sided adverse selection)

7. Moral Hazard (Summary of moral hazard issues in the insurance context, including diverse equilibrium outcomes under ex ante moral hazard, loss prevention & loss reduction, and ex post moral hazard, i.e. frauds)

8. Liability and Insurance (Issues including the interaction between liability rules and insurance, the judgment proof problem, and moral hazard issues related with liability)

Part III: Insurance Market

9. Organizations of Insurers (Investigation of the relative strengths and weaknesses of diverse organizations of insurers such as Lloyd's of London, mutual companies, and stock companies)

10. Distribution Systems (Investigation of the relative strengths and weaknesses of diverse distribution systems of insurers such as direct writers, exclusive agency, independent agency, direct marketing and brokers)

11. Competition and Price-Quality Distribution (Study of the effects of insurance products as experience goods on the competition and the dispersion of price and quality in the insurance market)

12. Insurance Capacity and Cycle (Finding underlying explanations for the insurance cycle and focusing on the capacity shock theories)

13. Pricing (Introducing actuarial and financial pricing of insurance products)

14. Reinsurance and Risk Management of Insurers (Focusing on the risk management of insurers / Possibly merged into chapter 5)

15. Regulation (Effects of regulation on the competition and management of insurers / Possibly omitted or merged into chapter 11)

16. Capital Market and Insurance Market: Securitization, ART (Special topics on catastrophe insurance issues such as insurability, securitization, and ART)

17. Social Insurance (The role of social insurance / Possibly omitted or merged into other chapter)

Chapters 14, 15, and 17 are tentative.