Private insurance preferences defy mortality risk, reshaping life insurance markets.
Private information in life insurance markets can affect how much coverage people buy and their actual risk. Surprisingly, in life insurance, having more coverage doesn't always mean higher risk. This is because there are different types of private information at play. The study used a special model to separate the effects of private information on insurance preferences and mortality risk. The findings show that these two types of private information can balance each other out, leading to unexpected results in the life insurance market.