STICERD Economic Theory Seminars
Multidimensional Screening and Menu Design in Health Insurance Markets
Hector Chade (Arizona State University), joint with Victoria Marone, Amanda Starc, and Jeroen Swinkels
Thursday 08 June 2023 15:30 - 17:00
Many of our seminars and public events this year will continue as in person or as hybrid (online and in person) events. Please check our website listings and Twitter feed @STICERD_LSE for updates.
Unless otherwise specified, in-person seminars are open to the public.
Those unable to join the seminars in-person are welcome to participate via zoom if the event is hybrid.
About this event
We study a general screening model that encompasses the problem facing a price-setting insurer that offers vertically differentiated contracts to consumers with multiple dimensions of private information. We combine theory and calibrated numerical analysis to provide three novel results: (i) even in the presence of both selection and moral hazard, optimal menus satisfy intuitive conditions that generalize the literature on multidimensional screening and shed light on insurer incentives; (ii) the insurer’s problem with an infinite number of contracts is well-approximated with only a small set of contracts; and (iii) under conditions that are economically innocuous in our setting, the problem becomes dramatically simpler and can be solved using familiar graphical analysis. W illustrate the use of the simplified problem to provide intuition about optimal menus, contrast the incentives of a monopolist and a social planner, and evaluate policy interventions in a monopoly market.
Economic Theory Seminars are held on Thursdays in term time at 15:30-17:00, both ONLINE and IN PERSON in SAL 3.05.
Seminar organisers: Dr Andrew Ellis and Dr Christopher Sandmann.
For further information please contact Sadia Ali: firstname.lastname@example.org.
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