AN EXAMINATION OF DIFFERENT TYPES OF ADVERSE SELECTION IN FEDERAL CROP INSURANCE

Abstract

Different types of adverse selection-type of insurance product, type of unit, type of coverage and number of actual yields reported in Federal crop insurance is examined utilizing binomial and ordered logit discrete choice models for all U.S. cotton producers, 1997-2000. The associated costs of adverse selection in U.S. cotton range from $32 Million to$359 Million for the four-year period.Risk and Uncertainty,