Cream Skimming, Dregs Skimming, and Pooling: On the Dynamics of Competitive Screening

Arbeitspapier

We discuss the existence of a pooling equilibrium in a two-period model of an insurance market with asymmetric information. We solve the model numerically. We pay particular attention to the reasons for non-existence in cases where no pooling equilibrium exists. In addition to the phenom- enon of cream skimming emphasized in earlier literature, we here point to the the importance of the opposite: dregs skimming, whereby high-risk consumers are proÞtably detracted from the candidate pooling contract.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working paper ; No. 1-2003

Classification and Topics

• Classification: Wirtschaft ; Asymmetric and Private Information; Mechanism Design ; Insurance; Insurance Companies; Actuarial Studies ; Transactional Relationships; Contracts and Reputation; Networks
• Subject: Insurance ; Insurance Companies ; Transactional relationships ; Reputation

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lund, Diderik ; Nilssen, Tore
• Event: Veröffentlichung
• (who): Copenhagen Business School (CBS), Department of Economics
• (where): Frederiksberg
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/208463
• Last update: 10.03.2025, 11:44 AM CET