@article{ref1,
title="The Stochastic Dominance of No-Fault Automobile Insurance",
journal="Journal of Risk and Insurance",
year="1993",
author="Cummins, J. David and Weiss, Mary A.",
volume="60",
number="2",
pages="230-264",
abstract="This article presents a rigorous analysis of no-fault automobile insurance in terms of stochastic dominance theory. In the baseline case, with identical drivers and actuarially fair insurance, no-fault is stochastically dominant as long as the no-fault insurance premium exceeds the tort premium. In this case, no-fault brings a higher proportion of accident costs under insurance, increasing driver welfare. When expense charges are introduced (actuarially unfair insurance) no-fault may still be stochastically dominant if the expense charge is less under no-fault, even if no-fault weakens incentives for good driving and leads to higher accident rates. Elective no-fault is unlikely to reduce auto insurance costs, because drivers with high propensities toward moral hazard are likely to retain their right to sue by choosing tort.<p />",
language="",
issn="0022-4367",
doi="10.2307/252906",
url="http://dx.doi.org/10.2307/252906"
}