Disclosure in Insurance Markets with Limited Screening
2026-07-21
We investigate the impact of information disclosure, via a statistical instrument, on consumer welfare in competitive insurance markets with limited screening. We demonstrate that, under natural constraints on information disclosure, no statistical instrument is “safe” to implement. There always exists a nonnegligible set of prior beliefs about the risk types of consumers, compatible with an observed market situation, under which additional information disclosure strictly worsens welfare.