MOUMINOUX Claire

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While the laws are justified on the basis of the efficiency they provide to society, policy makers and researchers focus on the reasons why people violate the law. Crimes and violations induce directly costs. But there is another indirect costs that is generally ignored : the fact that a person can violate the law (whether it does or not) can reduce trust in one's honesty. Thus, even if the economic agent is honest and respects the law, this loss of confidence, which could be unfounded, is also a source of inefficiency. We introduce in an experiment, a normative rule of "decision" in order to elicit both honesty and beliefs about honesty from subjects in the lab. There is no direct transfer of money between both part to avoid any inequality aversion or altruism aversion. The main question remains how individuals trust in the honesty of an anonymous group. Subjects are split into two groups : those who are subject to the temptation of (unverifiable) dishonesty and those who value the dishonesty of others. We inform each participant that we cannot identify defection. We find an important heterogeneity of trust in honesty through subjects. On average, subjects A suggests that participants B are more honest than they are. Moreover, we identify distortion of effective honesty and beliefs about other honesty when the environment of players A is unfavorable.

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The objective of this thesis is to analyze the interactions between economic agents operating in the retail insurance market. On the one hand, policyholders wishing to cover themselves against a risk of loss must explore the market in order to subscribe to a contract in line with their perception of the risk. On the other hand, insurers compete in a regulated market, imposing on them a certain level of capital in order to guarantee their solvency in a context of uncertainty about the risks underwritten. On the other hand, intermediaries offer their services in order to facilitate the interaction between consumers, who are averse to risk, and firms, which take risks. It is therefore in this context that we analyze the behavior of insurance actors from different perspectives. Chapters 1 and 2 of this thesis are the result of laboratory experiments, carried out using a web interface designed specifically for these studies. The results in Chapter 3 are based on a theoretical model and numerical simulations. Chapter 1 focuses on the relationship between honesty and honesty beliefs of economic agents. Using data collected in the laboratory, we show how uncertainty and the feeling of being in more or less advantageous conditions impact both the level of honesty and the belief in honesty towards others. In general, consumers overestimate the honesty of intermediaries. Thus, this result justifies their presence in the insurance market. On the other hand, we also show that the financial incentives offered to intermediaries distort honesty beliefs. The lower the incentive level, the more dishonest behavior is anticipated by consumers. In Chapter 2, we highlight the dilemma faced by the consumer in a market with multiple distribution channels. Should he explore by himself and choose among a large set of contracts or delegate part of his decision to an intermediary plus or minus search costs, we show that obfuscation related to a large amount of information and beliefs in the honesty of intermediaries are the main determinants of search and purchase decisions. We also show that obfuscation and intermediaries' attitudes are sources of inefficiency in decision making, in particular with respect to the characteristics of the insurance contracts purchased by consumers. In this sense, the identification of a focus effect supports the importance of the price level in decision making to the detriment of the risk environment and the level of coverage. The introduction of search costs in the exploration process, as well as the heterogeneity of honesty beliefs, justify the multi-channel distribution strategies adopted by insurers. An analysis of a repeated non-cooperative game is presented in Chapter 3 of this thesis where losses and consumer behavior are stochastic and insurers compete on price. In order to incorporate the regulators' constraints, we determine Nash equilibria under solvency constraints. We also analyze the sensitivity of equilibrium premiums to the parameters of the game, in particular when firms do not benefit from the same comparative advantages (i.e. reputation leading to different levels of customer retention, insurers' seniority leading to different capital stocks).

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This thesis aims at explaining interactions among economic agents operating in the retail insurance market. On the one hand, the policyholder is willing to be covered against a risk. To do so, they have to explore the insurance market to purchase a contract in line with their risk perception. On the other hand, insurers compete in a regulated market which imposes capital constraints for shock loss absorption purposes. In between, intermediaries may provide services in order to facilitate interaction between risk-adverse consumers and risk-taker firms. In this context, we analyze economic behaviors of insurance actors through different perspectives. Chapter 1 and 2 both result from original laboratory experiments, conducted through a web-interface especially designed for these studies. Results in Chapter 3 rely on a theoretical model and numerical simulations. Chapter 1 emphasizes on the relationship between honesty and beliefs about honesty of economic agents. According to laboratory results, we show how the uncertainty and the perception of advantageous conditions impact the level of honesty and beliefs about honesty. In general, consumers estimate that intermediaries are more honest than they really are, hence supporting their physical presence in the insurance market. However, intermediary financial incentives are a source of distortion of honesty beliefs: the weaker the level of the incentive, the stronger the deviation anticipations. In Chapter 2, we shed light on the dilemma faced by insurance purchasers under a multichannel distribution. Should the consumer, themselves, choose from a large set of insurance policies, or rather delegate a part of their decision to a more or less honest intermediary? Using experimental approaches, including exogenous search costs, we show that obfuscation and beliefs about intermediary honesty are the main determinants of individual choices. We also find that obfuscation and intermediaries’ deviation are the main sources of inefficiency in decision-making, especially regarding the features of the insurance contracts chosen by consumers. Our identification of the focal point effect supports the importance of the price level on purchasing decisions rather than the risk environment or the coverage level. The introduction of search costs in the exploration process, as well as the heterogeneity of beliefs about honesty, justify multichannel distribution strategies adopted by insurers. An analysis of insurer price competition with a repeated one-period non-cooperative game is conducted in Chapter 3, where both insurer losses and consumer behaviors are stochastic. Because of regulatory obligations, we consider a solvency constraint when computing Nash-Equilibrium. We determine the sensitivity of the premium equilibrium with respect to the parameters, especially when firms do not benefit from same competitive advantages (i.e. reputation effect leading to differences in consumers inertia or market seniority leading to differences in capital stock). We also study insurers’ market share in response to the entry of new insurer undercutting prices but dealing with binding solvency constraints.

This paper aims to shed light on the dilemma faced by insurance purchasers faced with multiple distribution channels. Should the consumer herself choose from a large set of insurance policies or rather delegate a part her decision to an intermediary who is more or less honest? We consider decisions based on a number of real-world insurance distribution channels with different information frames. Beliefs about intermediary honesty are the main determinants of individual choice. In addition, the obfuscation of information is the main source of inefficiency in decision-making, particularly regarding the characteristics of the insurance contracts chosen by consumers.

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