Anti-selection and punishment: application to credit and insurance markets.

Summary The purpose of this thesis is to provide a study of the effects of anti-criminal behavior mechanisms applied to anti-selection problems in the insurance and credit markets. The first part of this thesis analyzes the anti-selection problem in the insurance market. Policyholders have information about the risk to be insured that is unknown to the insurers. After the risk has been realized, the insurers can perform a costly but perfect audit of the type of each insured. In the first chapter, we present a model of a competitive insurance market. The auditability of the type of insureds allows insurers to require risk statements from the insureds and impose penalties for fraud. The use of auditing and sanctions allows for increased risk coverage of low-risk insureds. In the second chapter, we consider a monopolistic insurance market. We assume that policyholders can vote on the levels of penalty the insurer can impose on a fraudster. We study the effects of these votes on equilibrium contracts. We show that the penalty voted (which maximizes the utility of the riskiest policyholders) can be more penalizing than the nullity of the contract. In the second part of the third chapter, we present a model of adverse selection in a competitive credit market. We consider the introduction of social sanctions in debt contracts when borrowers cannot provide collateral. We study the effects of these sanctions through two types of loan contracts: individual loan contracts and loan contracts binding several entrepreneurs. We show that the presence of social sanctions allows for the discrimination of projects based on their quality when contractors do not know each other. We obtain that group loan contracts can dominate individual loan contracts.