Ecole Centrale de Marseille

Technopole de Château Gombert

38 rue Joliot-Curie

13013 Marseille

# Henriet

## Publications

In the microfinance sector, experienced lenders enjoy an information advantage over first-time entrepreneurs. Our study proposes an analysis of the business training provided on a par with microloans and its potential effect on borrowers’behavior. First, we present a simple theoretical mechanism showing that an information advantage concerning borrower risk can lead to a non-monotonic relationship between risk and business training provision. Second, using a hand-collected data set of loan applications to a French MFI, we empirically examine the relationship between business training provision and borrower risk, controlling for selection bias and endogeneity. The collected evidence supports the existence of a non-monotonic relationship and shows that business training significantly increases the survival time of loans. Our results are robust to alternative econometric models.

We study a risk-sharing agreement where members exert a loss-mitigating action which decreases the amount of reimbursements to be paid in the pool. The action is costly and members tend to free-ride on it. An optimal risk-sharing agreement maximizes the expected utility of a representative member with respect to both the coverage and the (collective) action such that efficiency is restored. We study the sustainability of the optimal agreement as equilibrium in a repeated game with indefinite number of repetitions. When the optimal agreement is not enforceable, the equilibrium with free-riding emerges. We identify an interesting trade-off: welfare generated by the optimal risk-sharing agreement increases with the size of the pool, but at the same time the pool size must not be too large for collective choices to be self-enforcing. This generates a discontinuous effect of pool size on welfare.

Some insurance markets are affected by the well-known phenomenon of ?underwriting cycles,? made up of a tight phase during which premiums and profits increase while capacities decline, followed by a slacker period, characterized by lower prices and replenished capacities. It is difficult to explain these cycles within the classic framework of perfect financial markets. They imply a certain degree of predictability for premiums, a correlation between insurance company ROE and claims, which appears to contradict the principle of the no-arbitrage condition. We demonstrate that these properties can be perfectly well explained in a competitive equilibrium model with financial frictions. Our model extends the classic approach of ruin theory to a macroeconomic model where insurance premiums are endogenous and result from the balance between policy supply and demand. Companies determine their underwriting policies and stock issuance and buyback policies in a way calculated to maximize their stock share price. Insurance premiums are a deterministic function of the total market capitalization of all insurance companies. Our results explain why insurance premiums are predictable, as well as the correlation between ROE and claims. In fact, rather than genuine cycles, premiums and capacities oscillate between two extreme values with trends changing direction once one of these twovalues is attained. Our model illustrates the power of the new generation of macroeconomic models with financial frictions, introduced by Brunnermeier and Sannikov (2014), which can be successfully applied to the analysis of other important questions for insurance and reinsurance markets. Classification JEL: E10, G14, G22.

We develop a continuous-time general-equilibrium model to rationalise the dynamics of insurance prices in a competitive insurance market with financial frictions. Insurance companies choose underwriting and financing policies to maximise shareholder value. The equilibrium price dynamics are explicit, which allows simple numerical simulations and generates testable implications. In particular, we find that the equilibrium price of insurance is (weakly) predictable and the insurance sector always realises positive expected profits. Moreover, rather than true cycles, insurance prices exhibit asymmetric reversals caused by the reflection of the aggregate capacity process at the dividend and recapitalisation boundaries.

We examine how risk-sharing is impacted by asymmetric information on the probability distribution of wealth. We define the optimal incentive compatible agreements in a two-agent model with two levels of wealth. When there is complete information on the probability of the different outcomes, the resulting allocation satisfies the mutuality principle (which states that everyone's final wealth depends only upon the aggregate wealth of the economy). This is no longer true when agents have private information regarding their probability distribution of wealth. Asymmetry of information (i) makes ex-post equal sharing unsustainable between two low-risk agents, and (ii) induces exchanges when agents have the same realization of wealth.

We compare the alternative approaches for regulating genetic information in the health insurance market when prevention measures are available. In the model, firms offer insurance contracts to consumers who are initially uninformed of their risk type but can obtain such information by performing a costless genetic test. A crucial ingredient of our analysis is that information has decision-making value since it allows for optimal choice of a self-insurance action (secondary prevention). We focus on the welfare properties of market equilibria obtained under the different regulatory schemes and, by using an intuitive graphical analysis, we rank them unambiguously. Our results show that Disclosure Duty weakly dominates the other regulatory schemes and that Strict Prohibition represents the worst regulatory approach.

We analyze the optimal contract between a risk neutral regulator providing a curative goods and a risk averse patient who learns the realized value of his/her health status after the contracting stage. Consumption of a curative good (healthcare) reduces the disutility associated with a disease. We show that the consumption of curative goods is larger than in the complete information case, that this overprovision increases with the degree of patients’ risk-aversion and the marginal cost of treatment. Ceilings on the amount of healthcare are part of the optimal contract when risk aversion is important.

The share of the public sector in health insurance provision varies enormously from country to country. It is larger in more redistributive countries. We provide a possible theoretical explanation for these facts: a public health insurance system, financed by taxes, can be an efficient means of redistribution, complementary to income taxation. This relies on the assumption of a negative correlation between income and morbidity. We examine the empirical validity of this assumption on macro data.

No abstract is available for this item.

To share the fixed cost of a communication network, the private-cost method allocates to each subscriber the cost of his dedicated terminal devices. The external-cost method shares the connecting cost of user i among all of his correspondents in proportion to their traffic with i. All convex combinations of these two methods are characterized by three axioms: additivity with respect to connecting costs, sustainability (it is not profitable for any subnetwork to duplicate equipment for inside traffic), and no transit (it is not profitable for any three users i, j, and k to make some of the traffic between i and j transit through k).