Universidad de los Andes Facultad de Economía Por: Alvaro J. Riascos, Sergio A. Camelo
We evaluate, in terms of efficiency and selection incentives, four different ex post risk sharing mechanisms. Outlier risk sharing (ORS), proportional risk sharing (PRS), risk sharing for high costs (RSHC) and risk sharing for high risks. Our results suggest that the best mechanism in terms of their implied efficiency selection trade off are, risk sharing for high costs and risk sharing for high risks. In general, outlier risk sharing has a poor performance.