Skip to main content
No Access

Testing for Asymmetric Information in Insurance Markets

University of ChicagoInstitut National de la Statistique et des Etudes Economiques, Centre de Recherche en Economic et Statistique, and Centre National de la Recherche Scientifique

The first goal of this paper is to provide a simple and general test of the presence of asymmetric information in contractual relationships within a competitive context. We also argue that insurance data are particularly well suited to such empirical investigations. To illustrate this claim, we use data on contracts and accidents to investigate the extent of asymmetric information in the French market for automobile insurance. Using various parametric and nonparametric methods, we find no evidence for the presence of asymmetric information in this market.