The asymmetric information problem in taiwan's cancer insurance market

Abstract

This paper investigates the problem of asymmetric information in Taiwans cancer insurance market. Through the survey data, we find evidence of adverse selection existing in this market. Furthermore, we collect additional information on the individual, and find that the individuals family cancer history contains additional valuable information. It can not only more accurately predict the probability of contracting cancer, as well as predict the willingness to purchase extended cancer insurance, but it can also help to mitigate the severity of adverse selection in the insurance market. © 2011 The International Association for the Study of Insurance Economics 1554-964X/11.