Optimal Pooling in a Peer-to-Peer Framework: Exploring Risk-Sharing, Self-Protection, and Moral Hazard

Peer-to-peer insurance models, that jointly incorporate the forms of centralized insurer's underwriting and decentralized peers' risk sharing, are emerging. Under these innovative risk sharing forms, the risk is separated into two layers: the first below-deductible part is shared within a community, and the second above- deductible loss, exceeding the community's risk-bearing capacity, is covered by an insurer. In this project, we plan to investigate the primary feature of peer-to-peer insurance from the perspective of risk-averse participants, such as the existence and closed-form expression of optimal deductible, join willingness of participants, moral hazard, etc.