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An Experimental Investigation of the Impact of Ambiguity on the Valuation of Self-Insurance and Self-Protection

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  • Di Mauro, Carmela
  • Maffioletti, Anna

Abstract

We build two experimental markets to examine individual valuations of risk reductions with two risk-management tools: self-insurance and self-protection. We find no positive evidence that the risk-reducing mechanisms constitute a "frame." Ambiguity in the probability on average affects valuation only weakly, and changes in the representation of ambiguity do not alter valuation. Finally, unlike the results obtained by Hogarth and Kunreuther for the case of market insurance, our findings do not provide a strong support for the "Anchoring and Adjustment" ambiguity model. Copyright 1996 by Kluwer Academic Publishers

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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 13 (1996)
Issue (Month): 1 (July)
Pages: 53-71

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Handle: RePEc:kap:jrisku:v:13:y:1996:i:1:p:53-71

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Web page: http://www.springerlink.com/link.asp?id=100299

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Cited by:
  1. Akay, Alpaslan & Martinsson, Peter & Medhin, Haileselassie & Trautmann, Stefan, 2010. "Attitudes Toward Uncertainty Among the Poor: Evidence from Rural Ethiopia," Discussion Papers dp-10-04-efd, Resources For the Future.
  2. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027 Elsevier.
  3. Shavit, Tal & Benzion, Uri & Haruvy, Ernan, 2007. "Risk aversion and under-hedging," Journal of Economics and Business, Elsevier, vol. 59(3), pages 181-198.
  4. John Hey & Massimo Paradiso., . "Dynamic Choice and Timing-Independence: an experimental investigation," Discussion Papers 99/26, Department of Economics, University of York.
  5. Lahno, Amrei M., 2014. "Social anchor effects in decision-making under ambiguity," Discussion Papers in Economics 20960, University of Munich, Department of Economics.
  6. Marielle Brunette & Laure Cabantous & Stéphane Couture & Anne Stenger, 2008. "Insurance Demand for Disaster-type Risks and the Separation of Attitudes toward Risk and Ambiguity: an Experimental Study," Working Papers - Cahiers du LEF 2008-05, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
  7. Treich, Nicolas, 2010. "The value of a statistical life under ambiguity aversion," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 15-26, January.
  8. Gollier, Christian & Alary, David, 2008. "Should more ambiguity averse agents exert more effort ?," Economics Papers from University Paris Dauphine 123456789/6500, Paris Dauphine University.
  9. Ozlem Ozdemir, 2007. "Valuation of Self-Insurance and Self-Protection under Ambiguity: Experimental Evidence," Jena Economic Research Papers 2007-034, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

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