Replication code for "Perfect Competition in Markets with Adverse Selection" by Eduardo Azevedo and Daniel Gottlieb.

Replicates the figures and tables in the paper. The most important methods are implemented as general MATLAB classes. These can be adapted to other models of firm competition with adverse selection. Developed by Eduardo Azevedo and Rafael Mourao. Link to repository: https://github.com/rafaelmourao/ag-competition and fork at https://github.com/eduardomazevedo/ag-competition.

The scripts are in five folders:

./classes

Contains classes with the most important functions.

• model.m: abstract class that defines all properties and methods that should be implemented by a model of perfect competition with adverse selection.
  • healthcaralognormalmodel.m: subclass for the health insurance model in the paper with linear contracts and normally distributed losses.
  • healthcaralognormalmodel_nl: subclass for the health insurance model in the paper with nonlinear contracts and lognormally distributed losses.
• population.m: A population object describes the preferences of a finite number of consumers. This class has methods for finding competitive equilibria and optima.

./figuresManuscriptCompetition

Generates figures and tables for the linear contracts health insurance model in the paper.

• run_directory.sh: bash script used to run the whole folder.
• calculations_parallel.m: creates the populations and runs the main calculations in parallel
• welfare_table.m: prints the .tex tables used in the paper
• plot_figures.m: plots the figures. Uses plotFunctions/plotEquilibriumAndOptimum.m as an auxiliary function for some figures.

./figuresNonLinearModel

Generates figures and tables for the nonlinear contracts health insurance model in the paper.

• run_directory.sh: bash script used to run the whole folder.
• create_population_lognormal.m: creates the populations in parallel. Do not forget to set the desired number of workers, this program is very CPU intensive and may take a few days if running with few cores.
• calculate_equilibrium_parallel.m: runs the main calculations.
• prepare_figures.m: saves the data used for the plots.
• plot_figures.m: plots the figures.
• print* - print tex tables and values, and some .txt tables with additional information.

./tests

Test scripts and a folder containing exploratory analyses.

./plotFunctions

Auxiliary functions for plotting:

• num2bank.m: Downloaded from MATLAB central and slightly modified function for formatting numbers.
• ./export_fig: http://www.mathworks.com/matlabcentral/fileexchange/23629-export-fig

Authors

Eduardo Azevedo and Rafael Mourão

Running

Tested in a linux server, MATLAB 2014b with a parallel cluster set up. Some of the code uses KNITRO 9.1.0. If KNITRO is not installed it will probably run correctly using MATLAB's optimization functions.

License

This is free and unencumbered software released into the public domain.

Anyone is free to copy, modify, publish, use, compile, sell, or distribute this software, either in source code form or as a compiled binary, for any purpose, commercial or non-commercial, and by any means.