Health Insurance Policy and Quality

1
Health Insurance Policy and Quality

• Carlee Ness
• Priscilla Guerra

2
Question

• What happens to competition when the buyer
  doesnt know the quality of the insurance company?

3
Hypothesis

• In treatment one, we expect that buyers will make
  their purchase decision based upon price signals
  from the sellers because this is the only
  information that they have. Therefore, prices
  offered by X and Y will be higher in treatment
  one than in treatment two, and lower for Z.
• In treatment two, we expect that buyers will no
  longer make their purchase decision based only on
  price. Buyers will be informed of the prices
  therefore, prices for the policies should be more
  stable, and higher than in treatment one because
  buyers know the actual value of the policies.

4
Seller X
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Seller Y
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Seller Z
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Average Price Offers
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Purchase Prices