Abstract
This short paper examines the simple competitive insurance market in the presence of information ambiguity. Information ambiguity is described through a probability measure on an extended state space that includes extra ambiguous states. In an ambiguous state, an ambiguity-averse individual assumes that the worst possible outcome would be realized. It is shown that ambiguity of the insurers leads to higher premium rates. If insurers are equally or less ambiguous than their customers, a unique equilibrium exists, and full insurance will be purchased. If insurers are more ambiguous than customers, less than full insurance or no insurance will be purchased.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
