Advantageous Selection in Crop Insurance: Theory and Evidence
Abstract
© 2018 The Agricultural Economics Society We extend the recently proposed multi-dimensional asymmetric information model to show that advantageous selection could be present in crop insurance with two types of coverage: (i) multiple perils (e.g. a multi-peril, ‘all risk’ policy), and (ii) a specific named peril (or set of perils). Our theoretical model suggests that certain characteristics of an insured farmer (or farm) under both types of coverage can be sources of advantageous selection. Farmers who advantageously select are more likely to purchase insurance coverage and less likely to realise a loss. A supplementary empirical analysis, based on data from the Philippine crop insurance market, illustrates how sources of advantageous selection can be identified econometrically.
Source or Periodical Title
Journal of Agricultural Economics
ISSN
0021857X
Page
646-668
Document Type
Article
Subject
Advantageous selection, crop insurance
Recommended Citation
He, Juan; Rejesus, Roderick; Zheng, Xiaoyong; and Yorobe, Jose, "Advantageous Selection in Crop Insurance: Theory and Evidence" (2021). Journal Article. 1019.
https://www.ukdr.uplb.edu.ph/journal-articles/1019