Abstract: AbstractWe study the demand for Long Term Care (LTC hereafter) insurance in a setting where agents have state‐dependent preferences over both a daily life consumption good and LTC expenditures. We assume that dependency creates a demand for LTC expenditures while decreasing the marginal utility of daily life consumption, for any given consumption level. Agents optimize over their consumption of both goods as well as over the amount of LTC insurance (LTCI). We first show that some agents optimally choose not to insure themselves, while no agen...
(read more)
Topics: 
Microeconomics
Actuarial science