Document Type
Article
Disciplines
Insurance Law
Abstract
There is a well-known conflict of interest between liability insurers and policyholders with respect to the decision to settle or litigate a claim. This short note provides a simple graphical explanation for the problem and grounds it in the way the structure of the parties' payouts drives their attitudes towards risk. An optional appendix links the insights to the elementary mechanics of financial options.
Recommended Citation
Siegelman, Peter, "A Primer on the Economics of Conflicts of Interest" (2023). Connecticut Insurance Law Journal. 388.
https://digitalcommons.lib.uconn.edu/cilj/388