Heterogeneous Selection in the Market for Private Supplemental Dental Insurance: Evidence from Germany

Jan Michael Bauer, Jörg Schiller, Christopher Schreckenberger

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This paper analyzes the German market for supplemental dental insurance to identify selection behavior based on individuals’ private information. The rather limited underwriting by German private health insurers makes this market especially prone to selection effects. Although the standard positive correlation test does not indicate asymmetric information in this market, we conjecture that this outcome may result from sample heterogeneity when adverse and advantageous selection occur simultaneously and offset each other. Examining a large set of potential sources of selection effects, we find mainly that the holding of other supplemental health insurance policies, which is related to risk preferences, contributes to an advantageous selection in this insurance market. Our results suggest that even in the absence of a positive correlation between risk and insurance coverage, the German market for supplemental dental insurance suffers from information asymmetry, which is caused by multidimensional private information.
Original languageEnglish
JournalEmpirical Economics
Issue number1
Pages (from-to)205-231
Number of pages27
Publication statusPublished - Jul 2020

Bibliographical note

Published online: 11. February 2019


  • Asymmetric information
  • Advantageous selection
  • Adverse selection
  • Dental insurance
  • Supplemental health insurance

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