Over the last decade, however, empirical work on selection in insurance markets has gained considerable momentum, and a fairly extensive (and still growing) empirical literature on the topic has emerged. This research has found that adverse selection exists in some insurance markets but not in others. It has also uncovered examples of markets that exhibit “advantageous selection”—a phenomenon not considered by the original theory, and one that has different consequences for equilibrium insurance allocation and optimal public policy than the classical case of adverse selection. Researchers have also taken steps toward estimating the welfare consequences of detected selection and of potential public policy interventions."

Something not quite right about this - a distribution over the models would in principle capture all the relevant information for the planning subproblem - no need for joint optimization.

A concise introduction to discrete time "asset pricing". Doesn't make clear distinctions between marginal/equivalence pricing in "incomplete markets" or present "risk neutral probabilities" as dual variables

Whittaker introduces 1D smoothing in 1922, complete with the Bayesian derivation. There is an earlier German paper with a similar model.