Syllabus - Institut für Risikomanagement und Versicherung

INSTITUT FÜR RISIKOMANAGEMENT UND VERSICHERUNG
INSTITUTE FOR RISK MANAGEMENT AND INSURANCE
Lecture and Tutorial (6 ECTS)
Insurance Economics
Lecturers
Chair or Institute
Institute for Risk Management and Insurance (INRIVER)
Lecturers:
Prof. Dr. Andreas Richter
E-mail: [email protected], phone: 089/2180-2171
Michael Hanselmann
E-mail: [email protected], phone: 089/2180-2145
Time & Location:
See schedule below
Period:
Blocked Course June 8th June through July 3rd, 2015.
Credits:
6 ECTS; a written exam will be held, tentative date is Friday, July 17th,
11 am – 01 pm
Cycle:
Usually in the summer semester
Main Objectives
- To obtain an overview of essential concepts in insurance economics
- To understand the implications of asymmetric information for insurance contracting
- To be able to explain and evaluate real-life insurance product design from an economic point
of view
LEITUNG
Professor Dr. Andreas Richter
INTERNET
http://www.inriver.bwl.uni-muenchen.de
BÜRO
Schackstraße 4 / III. OG
ERREICHBAR MIT
U3/U6 Universität
-2-
Description
This course deals with core concepts of the theory of insurance demand. After a review of
essentials of decision theory the optimal design of insurance products is addressed from an
information economics point of view. Optimal risk sharing in a complete information setting is
discussed as the benchmark case. The main emphasis is placed on principal agent problems due
to superior knowledge of the insured. In particular the class covers adverse selection, moral
hazard and insurance fraud which heavily affect almost any real-life insurance market.
Implications for product design as well as the interaction between insurance and other markets
are analyzed.
Exam
A two-hour written exam will be given at the end of the course. The tentative date is Friday, July
th
17 , 11 am – 01 pm, room to be determined.
Prerequisites
This is a Master (/Diploma)-level class. Basic knowledge of decision theory, finance, and
economics is necessary.
No written application is required.
Course Outline
Module I:
Selected Concepts of Decision Theory
Module II:
Optimal Insurance Contracts under Complete Information
Module III:
Adverse Selection in Insurance Markets
Module IV:
Moral Hazard in Insurance Markets
Module V:
Insurance and the Markets for Repair Goods
Module VI:
Economic Analysis of Insurance Fraud
LEITUNG
Professor Dr. Andreas Richter
INTERNET
http://www.inriver.bwl.uni-muenchen.de
BÜRO
Schackstraße 4 / III. OG
ERREICHBAR MIT
U3/U6 Universität
-3-
Timeline
Subject to possible changes, the following lectures and recitation sessions are planned:
Date
08.06.2015
10.06.2015
12.06.2015
15.06.2015
17.06.2015
19.06.2015
22.06.2015
24.06.2015
26.06.2015
29.06.2015
03.07.2015
Location
Time
L/T
Content
Readings
Lehrturm
W 201
Lehrturm
W 101
Lehrturm
W 101
Lehrturm
W 201
Lehrturm
W 101
Lehrturm
W 101
Lehrturm
W 201
Lehrturm
W 101
Lehrturm
W 101
Lehrturm
W 201
Lehrturm
W 101
10 a.m. 02 p.m.
02 p.m. 06 p.m.
10 a.m. 02 p.m.
10 a.m. 02 p.m.
02 p.m. –
06 p.m.
10 a.m. 02 p.m.
10 a.m. 02 p.m.
02 p.m.
06 p.m.
10 a.m. 02 p.m.
10 a.m. 02 p.m.
10 a.m. –
02 p.m.
L
Modules I & II
ARROW (1963)
T
Problem sets 1 & 2
L
Module II
ARROW (1963); RAVIV (1979)
L
Module III
AKERLOF (1970); ROTHSCHILD /
STIGLITZ (1976)
T
Problem sets 3 & 4
L
Modules III & IV
HOLMSTRÖM (1979); SHAVELL (1979)
L
Module IV & V
NELL / RICHTER / SCHILLER (2009);
T
Problem sets 5 & 6
T
Problem set 6 & Case Study
Genetic Testing
T
Problem sets 7 & 8
L/T
Module VI & Mock Exam
NELL / SCHILLER (2002) ; PICARD
(2000)
Course Materials
Course materials can be found at the homepage of the institute
http://www.inriver.bwl.unimuenchen.de/studium/sommer_2015/master_sose_2015/ins_eco_sose_2015/index.html
A reader of the essential readings and additional readings is available at the INRIVER library. For
opening times, please check:
http://www.inriver.bwl.uni-muenchen.de/forschung/literatur/index.html
LEITUNG
Professor Dr. Andreas Richter
INTERNET
http://www.inriver.bwl.uni-muenchen.de
BÜRO
Schackstraße 4 / III. OG
ERREICHBAR MIT
U3/U6 Universität
-4-
Essential Readings
Akerlof, George A. (1970): The Market for Lemons: Quality Uncertainty and the Market Mechanism, Quarterly Journal of Economics 84: 488-500.
Arrow, Kenneth J. (1963): Uncertainty and the Welfare Economics of Medical Care, American
Economic Review 53: 941-973.
Holmström, Bengt (1979): Moral Hazard and Observability, Bell Journal of Economics 10: 74-90.
Nell, Martin, Andreas Richter, and Jörg Schiller (2009): When prices hardly matter – Incomplete
insurance contracts and markets for repair goods, European Economic Review 53: 343–354
Nell, Martin, and Jörg Schiller (2002): Erklärungsansätze für vertragswidriges Verhalten von
Versicherungsnehmern aus Sicht der ökonomischen Theorie, Zeitschrift für die gesamte
Versicherungswissenschaft 91: 533 - 556.
Picard, Pierre (2000): Economic Analysis of Insurance Fraud, in: Dionne, G. (ed.): Handbook of
Insurance, Boston, 315-362.
Raviv, Artur (1979): The Design of an Optimal Insurance Policy, American Economic Review 69:
84-96.
Rothschild, Michael D. and Joseph E. Stiglitz (1976): Equilibrium in Competitive Insurance Markets: An Essay in the Economics of Imperfect Information, Quarterly Journal of Economics 90:
629-649.
Shavell, Steven (1979): On Moral Hazard and Insurance, Quarterly Journal of Economics 4: 541562.
Additional Readings
Cooper, Russell, and Beth Hayes (1987): Multi-period Insurance Contracts, International Journal
of Industrial Organization 5: 221-231.
Bender, Klaus and Andreas Richter (2003): Optimales Vertragsdesign bei moralischem Risiko in
der Rückversicherung (Optimal Reinsurance Contract Design in the Presence of Moral
Hazard), Zeitschrift für die gesamte Versicherungswissenschaft 92: 483-506.
Stiglitz, Joseph E. (1977): Monopoly, non-Linear Pricing and Imperfect Information: The
Insurance Market, Review of Economic Studies 44: 407-430.
Wilson, Charles (1977): A Model of Insurance Markets with Incomplete Information, Journal of
Economic Theory 16: 167-207.
Zweifel, Peter and Roland Eisen (2003): Versicherungsökonomie (2. Auflage), Springer Verlag,
Berlin Heidelberg
LEITUNG
Professor Dr. Andreas Richter
INTERNET
http://www.inriver.bwl.uni-muenchen.de
BÜRO
Schackstraße 4 / III. OG
ERREICHBAR MIT
U3/U6 Universität

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