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

本项目对承诺在动态合同中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，与收益相关的信息随着时间对称地演变。长期保险就是一个例子，当事人承诺长期合同的能力可以对合同的设计产生深远的影响。当双边承诺不可能时，仍然提供短期保险，但消费者可能面临分类风险：关于代理人类型的未来信息将被证明是不利的风险，从而增加未来的保费。这个问题具有重要的福利和政策含义。契约理论几乎没有受到经验上的关注。模型很难测试。它们往往非常程式化，而且问题的性质涉及不可观测对象之间的关系，使得测量非常困难。该项目的目标是观察寿险业，这是测试单方面承诺下的最优动态学习模型的理想环境。首先，人寿保险是一种典型的环境，在这种环境中，代理人按顺序接收关于他们健康状况的信息，这可能会使先前的行动(合同)对一方或双方来说不是最优的。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。这种类型的合同被用来检验该模型的含义。据我们所知，以前关于合同动态的研究没有使用直接的合同信息，现有的单方面承诺模型被用来获得对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)测试理论，(Ii)评估由于缺乏承诺而导致的潜在低效，以及(Iii)研究行业应对问题的方式。数据支持该模型的预测。首先，正如模型所预测的那样，几乎每一份提供的合同都涉及一定程度的前期工作。这一结论与在竞争和缺乏承诺(以及根据健康保险经验)下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的风险。其次，与模型的预测一致，前置(锁定)与较低的失误相关，进而与更好的风险池相关。最后，根据我们的数据，长期水平合同获得了长期保险的很大一部分收益。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(例如，不强制实施有保证的再生性)。缺乏再生性和没有分类风险保险是对健康保险提出的一些担忧。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(Mis)运行的某些方面。医疗保健市场还面临着各种各样的其他问题。对这一项目的分析可能会隔离那些完全由于缺乏双边承诺而产生的问题，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.