Insurance and Hirshleifer effect I am trying to understand the statmement that 'public information kills insurance opportunity' -- referred to as Hirshleifer effect. Does it (in general) lead to some undesirable outcomes? Could you explain that to me with a simple example? For me it is easy to form examples of trade breaking when there is asymmetric information (adverse selection for example) and that having an undesirable effects. But I am not able to fully grasp the meaning and consequences of Hirshleifer effect. 

Thanks 

UPDATE: Here is what I thought could be a simple example. Suppose there are two periods ($t_0, t_1$) and two possible states of nature ($s_1,s_2 $) that arise in period $t_1$. Suppose there are two agents. The first agent has an income stream that pays off only in state $s_1$ while, second agent's income stream pays off only in state $s_2$. Consumption happens only in $t_1$ and both agents prefer to consume in both the states than in just one (Inada condition as consuption goes to 0 is not satisfied) and more is always better. If at $t_0$, neither agent knows the state at $t_1$ then they might enter into a trade that ensures them positive consumption across both the states.

On the other hand, if, in $t_0$, state is already revealed publicly (in this example even privately to one agent) an agent who has a positive pay-off in $t_1$ would not be interested in any trade with the unlucky agent.

Is this way of thinking in the example correct?

Thanks for any comment
Here is what I thought could be a simple example. Suppose there are two periods ($t_0, t_1$) and two possible states of nature ($s_1,s_2 $) that arise in period $t_1$. Suppose there are two agents. The first agent has an income stream that pays off only in state $s_1$ while, second agent's income stream pays off only in state $s_2$. Consumption happens only in $t_1$ and both agents prefer to consume in both the states than in just one (Inada condition as consuption goes to 0 is not satisfied) and more is always better. If at $t_0$, neither agent knows the state at $t_1$ then they might enter into a trade that ensures them positive consumption across both the states.

On the other hand, if, in $t_0$, state is already revealed publicly (in this example even privately to one agent) an agent who has a positive pay-off in $t_1$ would not be interested in any trade with the unlucky agent.