We consider a model in which risk-neutral firms purchase liability insurance to guarantee their warranty policies. We show that the firms that have no problem in fulfilling their warranty policies have strong incentives to purchase liability insurance. Firms purchase insurance because doing so enhances their competitive powers. This paper complements the… (More)
We analyze the effects of life insurance settlement on the insurer's profit and the consumer and social welfare. We consider a one-period model in which the insurance market is monopolistic and the settlement market is competitive. Policyholders face heterogeneous liquidity risks in addition to mortality risks. Liquidity risks are introduced to address the… (More)
Preliminary. Please do not quote. 1 We thank Thi Nha Chau for her help.
We consider a two-period model under moral hazard when treatment is also preventive. In the second period, the treatment level under moral hazard is higher than that under no moral hazard. However, it may be lower than that under moral hazard, when overinsurance is not allowed. In the first period, the treatment level tends to be higher when treatment is… (More)
Relationships between an assembler and a vendor in a supply chain are investigated in two-period models when the assembler wants to reduce response time by incentive systems. The assembler may offer myopic or farsighted incentive contracts to the vendor, under short-term or long-term relationships. Incentive schemes, effort levels, and expected payoffs… (More)