Collaborative Research: The Role of Commitment in Dynamic Contracts: Evidence from Life Insurance

本研究对承诺在动态契约中的作用进行了实证和理论分析。我们考虑一个环境中的回报相关的信息对称地随着时间的推移而演变。长期保险就是这样一个例子，当事人对长期合同的承诺能力可能对合同的设计产生深远的影响。当双边承诺是不可能的，短期保险仍然提供，但消费者可能会遭受分类风险：风险，未来的信息，代理人的类型将证明是不利的，因此增加未来的保费。这个问题具有重要的福利和政策含义，而契约理论却很少受到实证研究的关注。模型很难测试。他们往往是非常程式化的，问题的性质涉及非观测之间的关系，使得测量非常困难。该项目的目标是看看人寿保险业，这是一个理想的环境下测试模型的最佳动态学习单边承诺。首先，人寿保险是一个典型的例子，在这种环境中，代理人顺序地接收有关他们的健康状态的信息，这些信息可能会使以前的行为（合同）对一方或双方来说都是次优的。第二，提供合同数据。第三，人寿保险合同提供了几个品种，非常适合分析承诺和重新谈判的影响。这种合同的种类是用来测试模型的含义。据我们所知，没有以前的工作，合同的动态使用直接的合同信息。现有的模型，片面的承诺，以获得经验预测的人寿保险合同的设计。观察到的合同的初步实证分析。这有以下目的：（i）测试理论，（ii）评估由于缺乏承诺而产生的潜在低效率，以及（iii）研究行业应对问题的方式。首先，正如该模型所预测的那样，几乎每一份提供的合同都涉及某种程度的前期装载。这一发现与在竞争和缺乏承诺的情况下（以及根据健康保险的经验）的预期形成鲜明对比，即，一系列短期合同，使被保险人面临重新分类风险。第二，与模型的预测一致，前负荷（锁定）与较低的失误有关，进而与更好的风险池有关。最后，根据我们的数据，长期水平的合同从长期保险中获得了很大一部分收益。值得注意的是，该行业在不需要监管的情况下实现了对重新分类风险问题的部分解决方案（例如，缺乏可续期性和没有分类风险保险是对健康保险提出的一些关切。了解人寿保险的经验可能有助于对健康保险的政策辩论，并有助于了解健康保险市场的（错误）运作的某些方面。医疗保健市场还存在其他各种问题。通过对这一项目的分析，可以找出那些仅仅是由于缺乏双边承诺而造成的问题，从而更好地了解医疗保险效率低下的根源。

This project presents an empirical and theoretical analysis of the role of commitment in dynamic contracts. We consider an environment where payoff relevant information symmetrically evolves over time. Long term insurance is an example of this where the ability of parties to commit to long term contracts can have a profound effect on the design of contracts. When bilateral commitment is impossible, short term insurance is still provided but consumers may be left to suffer classification risk: the risk that future information about the agent's type will prove unfavorable hence increasing future premiums. This issue has important welfare and policy implications.Contract theory has received little empirical attention. Models are difficult to test. They tend to be very stylized, and the nature of the question involves relations between non-observables, making measurement very difficult.The goal of the project is to look at the life insurance industry which is an ideal environment for testing models of optimal dynamic learning under one-sided commitment. First, life insurance is a prototypical example of an environment in which agents receive information sequentially about their health state that may render previous actions (contracts) suboptimal for one or both parties. Second, contractual data is available. Third, life insurance contracts are offered in several varieties ideally suited to analyze of the effects of commitment and renegotiation. This variety of contracts is used to test the implications of the model. To our knowledge no previous work on the dynamics of contracts has used direct contract information.The existing models on one-sided commitment are adapted to obtain empirical predictions on the design of life insurance contracts. A preliminary empirical analysis of the observed contracts is then presented. This has the following purposes: (i) testing the theory, (ii) evaluating the potential inefficiencies arising from lack of commitment, and (iii) studying the way the industry copes with the problem.The predictions of the model are supported in the data. First, as predicted by the model, virtually every offered contract involves some degree of front-loading. This finding is in sharp contrast with what would be expected under competition and lack of commitment (and in light of the health insurance experience), i.e., a sequence of short term contracts that leave the insured subject to reclassification risk. Second, in line with the predictions of the model, front-loading (lock-in) is associated with lower lapsation, and in turn with better risk pools. Finally, according to our numbers, the long-term level contracts capture a good part of the gains from long term insurance. It is worth noting that the industry achieved this partial solution to the problem of reclassification risk without need of regulation (e.g., no imposition of guaranteed renewability).Lack of renewability and the absence of insurance of classification risk are some of the concerns raised about health insurance. Understanding the life insurance experience may contribute to the policy debate over health insurance and help in understanding some aspects of the (mis)functioning of the health insurance market. The health care market suffers from a variety of other problems. The analysis of this project may isolate those problems that are solely due to the lack of bilateral commitment and hence to understand better the source of inefficiency in health insurance.