Ex‐post moral hazard in prevented planting

• DOI: 10.1111/agec.12451
• Publication Date: 2018-09-03T06:34:47Z
• Authors: Taehoo Kim; Man‐Keun Kim
• Keywords: Crop insurance; Moral hazard; Indemnity; Ex-ante

Abstract This article analyzes the existence of moral hazard in prevented planting (PP) United States. The PP provision is defined as “failure to plant an insured crop by final date due adverse events.” If farmer decides not a crop, receives indemnity. Late (LP) option for farmers while maintaining insurance after date. Crop may alter farmers’ behavior selecting or LP and could increase likelihood claims even though can choose LP. study finds evidence that with higher coverage tends more often (ex‐post hazard). Spatial panel models attest ex‐post empirically. Empirical results show ratio has positive relationship case corn production.