Repeated insurance contracts and moral hazard

Ariel Rubinstein*, Menahem E. Yaari

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review


An attempt is made to account for the frequently observed phenomenon of insurance companies offering discounts to clients who possess a favorable record of past claims. We argue that such discounts provide a mechanism which enables both insurer and insured to counteract the inefficiency which arises from moral hazard.

Original languageEnglish
Pages (from-to)74-97
Number of pages24
JournalJournal of Economic Theory
Issue number1
StatePublished - Jun 1983
Externally publishedYes


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