Little works had well discussed how insured’s behavior change on risk or risk aversion influences the asymmetric information problem. Empirically, using the data set of car damage insurance, this article shows that the change of insured’s risk aversion (risk) significantly constitute the positive (negative) effects of behavior change, which deteriorates (alleviates) asymmetric information when car insurance market indeed suffer such situation. Alternative, this paper demonstrates that the magnitude of positive or negative effects of behavior change is influenced by three factors: the price elasticity of risk aversion, the price elasticity of risk, the elasticity of demanding for insurance, by which the problem of alleviating (deteriorating) asymmetric information can be subtly explained. Also, in practical, these three factors could efficiently correct the malfunction on Malus-Bonus Scheme.
