Muermann, AlexanderKunreuther, Howard2023-05-232023-05-232008-04-012016-07-26https://repository.upenn.edu/handle/20.500.14332/42279We study optimal investment in self-protection of insured individuals when they face interdependencies in the form of potential contamination from others. If individuals cannot coordinate their actions, then the positive externality of investing in self-protection implies that, in equilibrium, individuals underinvest in self-protection. Limiting insurance coverage through deductibles or selling “at-fault” insurance can partially internalize this externality and thereby improve individual and social welfare.The final publication is available at Springer via http://dx.doi.org/10.1007/s11166-008-9033-1 The final publication is available at Springer via http://dx.doi.org/10.1007/s10957-009-9524-5insuranceself-protectioninterdependenciesexternalityEconomic TheoryInsuranceOther EconomicsArticle