Research On The Effect Of Risk Preference Heterogeneity On The Insurance Behavior In Medical Insurance Market

Adverse selection problem in insurance market has been a important research topic in Economics. Traditional information asymmetrytheory implies risk preference homogeneity assumption, and certifies that the phenomenon of adverse selection arised under this assumption in insurance maket. However, a large number of scholars have tested the non-adverse selection phenomenon in insurance market and found that the risk preference heterogeneity is an important cause of non-adverse selection phenomenon. In order to clearly explain the reasons for the formation of non-adverse selection, the essay based on theoretical and empirical levels and it analyze thereasons of non-adverse selection phenomenon and the influence mechanism of risk preference heterogeneity by using the knowledge of mathematics and insurance and econometrics in insurance market And using the Chinese medical insurance related data for empirical testing.First, this essay introduces the classic R-S theoretical models, including its theoretical assumptions and analytical framework and research findings, discuss why adverse selection arise. Studies have shown that the traditional theory implies one-dimensional heterogeneity assumption,and there are only individual risk differences in insurance market. Under these assumptions, risk becoming the only factor of affecting the contract selection and operation of the market, high-risk(low) groups will select high(low) coverage in surance.Then, we based on R-S model, correcting the assumption of risk preference homogeneity, using space state diagram and specific utility function analyzed the behavior of people in insurance maket under risk preference heterogeneity. Studies have shown thatnon-adverse selection phenomenon is arised under risk and risk preferencetwo-dimensional heterogeneous condition and risk preference is the main reason for the non-adverse selection.Finally, we use Risk assets accounted for the proportion of tot al assets to measuring risk Preference andinspect the correlation of among insurance coverage and risk preference and risk by using China Health and Retirement Longitudinal Study data.Studies have shown that:(1)risk preferenceheterogeneity is existed in insurance maket;(2) there is a negative correlation between risk preference and insurance, apositive correlation between risk preference and risk, risk preference can enhance the positive correlation between insurance and health;(3)there exists a positive selection phenomenon in Medical Insurance Market. And risk preference increases the probability of positive selection phenomenon.