Author: C. Li, C. Liu, and J. Yeh Discussant: L. Tzeng Automobile Insurance Policy Options, Rating System, and Risk Classification Author: C. Li, C. Liu, and J. Yeh Discussant: L. Tzeng

Summary The paper uses a unique dynamic data to investigate whether the adverse selection exists in the insurance market. Based on the evidence of the separating equilibrium, the paper supports that the adverse selection exists in the insurance market. However, the conclusion becomes mixed after controlling the policy choice of the previous year.

Comments I would suggest that the paper tries to control advantageous selection. The paper mentions it in Page 2. But, I think that the details should be provided in the text and the formal test is necessary. I would suggest that the paper could consider use Granger causality test as suggested by recent literature.