Moral hazard, optimal healthcare-seeking behavior, and competitive equilibrium

MPRA Paper from University Library of Munich, Germany

Abstract: The theory of the optimal-consumption leisure choice under price dispersion describes the phenomenon of moral hazard as the customer’s reaction on unfair insurance policy. The unfair insurance offer does not equalize marginal costs of propensity to seek healthcare with marginal benefits on purchase. Under unfair insurance policy consumers increase ex post healthcare seeking activities and they optimize their consumption of medical services. The analysis of moral hazard results in the assumption that for an unfair offer there is an increase in the time horizon of the insurance policy that makes it fair and moral hazard becomes inefficient. The time horizon competition between insurance companies can eliminate moral hazard effect that clears the way to the competitive equilibrium.

Keywords: moral hazard; health insurance; healthcare seeking behavior; optimal consumption-leisure choice (search for similar items in EconPapers)
JEL-codes: D11 D83 I13 (search for similar items in EconPapers)
Date: 2017-09-07
New Economics Papers: this item is included in nep-com, nep-hea, nep-ias and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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https://mpra.ub.uni-muenchen.de/82263/1/MPRA_paper_82263.pdf revised version (application/pdf)

Related works:
Journal Article: Moral Hazard, Optimal Healthcare-Seeking Behavior, and Competitive Equilibrium (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:81352

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