Tests for ex ante and ex post moral hazard: How do insured consumers behave?

16 Feb 2017

Path diagram for an instrumental variable CBEH Researchers Dr David Rowell and Prof Luke Connelly, with Dr Son Nghiem (QUT) have published research on how insurance affects behaviour. They present a novel way to disentangle two sources of so-called “moral hazard” in insurance markets: moral hazard arises when insurance affects the probability of the insured event, or its cost. Their paper was published in Journal of Risk and Insurance.

Also see Rowell and Connelly’s 2012 article in the same journal for a discussion of the history of the term “moral hazard”.

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