Abstract
This paper examines the three main tools of risk management in a setting where reliability cannot be guaranteed. Thus, for example, insurers might be insolvent, sprinkler systems might be inoperative and alarm systems might be faulty. These types of nonreliability are shown to have significant consequences for risk management. In particular, the relationships between increased risk aversion and the use of the various risk management tools do not carry over from models with full reliability. Moreover, the well-known result of Ehrlich and Becker, that market insurance and self-insurance are substitutes, is shown to fail in the presence of nonreliability risk.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Briys, E., Schlesinger, H. & Schulenburg, JM. Reliability of Risk Management: Market Insurance, Self-Insurance and Self-Protection Reconsidered. Geneva Risk Insur Rev 16, 45–58 (1991). https://doi.org/10.1007/BF00942856
Published:
Issue Date:
DOI: https://doi.org/10.1007/BF00942856