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

本项目对动态契约中承诺的作用进行了实证和理论分析。我们考虑这样一个环境，在这个环境中，报酬相关信息会随着时间对称地演变。长期保险就是这样一个例子，当事人承诺长期合同的能力会对合同的设计产生深远的影响。当不可能有双边承诺时，短期保险仍然提供，但消费者可能会遭受分类风险：关于代理人类型的未来信息被证明是不利的，从而增加未来保费的风险。这个问题具有重要的福利和政策意义。契约理论很少受到实证的关注。模型很难检验。它们往往非常程式化，问题的本质涉及到不可观测之间的关系，这使得测量非常困难。该项目的目标是研究人寿保险行业，该行业是测试单侧承诺下最优动态学习模型的理想环境。首先，人寿保险是这样一种环境的典型例子，在这种环境中，代理人按顺序接收有关其健康状态的信息，这些信息可能使先前的行为（合同）对一方或双方都不是最优的。其次，合同数据是可用的。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。各种契约被用来测试模型的含义。据我们所知，以前没有关于契约动力学的研究使用过直接的契约信息。对现有的单方承诺模型进行了调整，以获得寿险合同设计的经验预测。然后对观察到的合同进行了初步的实证分析。这有以下目的：(i)检验理论，（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。模型的预测得到了数据的支持。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预先加载。这一发现与在竞争和缺乏承诺的情况下（并根据健康保险的经验）的预期情况形成鲜明对比，即一系列短期合同使被保险人面临重新分类的风险。其次，与模型的预测一致，前端加载（锁定）与较低的失效相关，进而与更好的风险池相关。最后，根据我们的数据，长期合同占据了长期保险收益的很大一部分。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，不强制实施保证可再生性）。缺乏可再生性和缺乏分类风险保险是人们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关于健康保险的政策辩论，并有助于理解健康保险市场（错误）运作的某些方面。医疗保健市场还存在其他各种各样的问题。对这一项目的分析可以分离出完全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.