Web of Science: 12 cites, Scopus: 17 cites, Google Scholar: cites,
La Crema : a case study of mutual fire insurance
Cabrales, Antonio 1964- (Universitat Pompeu Fabra)
Calvó Armengol, Antoni (Universitat Autònoma de Barcelona)
Jackson, Matthew O. (California Institute of Technology (Estats Units d'Amèrica))

Data: 2003
Resum: We analyze a mutual fire insurance mechanism used in Andorra, which is called La Crema in the local language. This mechanism relies on households' announced property values to determine how much a household is reimbursed in the case of a fire and how payments are apportioned among other households. The only Pareto-efficient allocation reachable through the mechanism requires that all households.
Resum: honestly report the true value of their property. However, such honest reporting is not an equilibrium except in the extreme case in which the property values are identical for all households. Nevertheless, as the size of the society becomes large, the benefits from deviating from truthful reporting vanish, and all the nondegenerate equilibria of the mechanism are nearly truthful and approximately Pareto efficient.
Ajuts: Ministerio de Educación y Ciencia BEC2000-1029
Ministerio de Educación y Ciencia SEC2001-0973
Agència de Gestió d'Ajuts Universitaris i de Recerca 1999/SGR-00157
NSF/SES-9986190
Drets: Tots els drets reservats
Llengua: Anglès
Document: Article ; recerca ; Versió publicada
Matèria: Nash equilibrium ; Risk aversion ; Utility funcions ; Fire Insurance ; Pareto efficiency ; Fire damage ; Reimbursement ; Property value ; Allocative efficiency ; Barns
Publicat a: Journal of Political Economy, Vol. 111 Núm. 2 (2003) , p. 425-458, ISSN 0022-3808

DOI: 10.1086/367680


34 p, 226.8 KB

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