Long-Term Care Insurance: Information Frictions and Selection
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This paper conducts a stated-choice experiment where respondents are asked to rate various insurance products aimed to protect against financial risks associated with long-term care needs. Using exogenous variation in prices from the survey design and individual cost estimates, these stated-choice probabilities are used to predict market equilibrium for long-term care insurance. Our results are twofold. First, information frictions are pervasive. Second, measuring the welfare losses associated with frictions in a framework that also allows for selection, it is found that information frictions reduce equilibrium take-up and lead to large welfare losses, while selection plays little role. (JEL D82, D83, G22, I13)
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2018 ◽
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2017 ◽
Vol 46
(1)
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pp. 293-306
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1992 ◽
Vol 11
(2)
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pp. 16-24
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2010 ◽
Vol 25
(2)
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pp. 176-184
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