Game Analysis And Application On Insurance Contract Under Dual Moral Hazard

The information asymmetry and uncertainty of nature are ubiquitous in marketeconomy. The traditional economics can't explain many economic phenomena, forexample, the problem of moral hazard, which totally breaches the assumption ofsymmetrical information. Therefore, economics of information becomes themainstream gradually, and principal-agent theory is the most important tool inresearching the moral hazard problem.We define ex-ante moral hazard and ex-post moral hazard as "dual moralhazard" in the paper, and analyze these two moral hazards together. The paperemploys the principal-agent theory to construct insurance contract models forsymmetric information and asymmetric information respectively, and concludes that:under the symmetric information, the optimal insurance contract requires fullinsurance coverage, which can obtain Pareto risk sharing. And in the moral hazardmodel, the optimal insurance contract requires partial insurance coverage, and thefinal loss suffered by insured individuals will increase if the total loss caused byaccidence increase.Meanwhile, the paper keeps on analyzing the game between insurancecompanies and insured individuals using game theory under the situation of dualmoral hazard. Dual moral hazard is the worst condition in social moral level. But inface of this situation, we can implement incentive methods in this exasperatesituation. Although it cannot increase the benefits of insurance companies or insuredindividuals absolutely, it can play a positive role on improving the total socialwelfare. At the end of the paper, I put the relative theories into practice on the issueof automobile credit insurance, and give some policy suggestion.