Carmela Di Mauro (Dipartimento di Economia Politica, Università della Calabria, Arcavacata di Rende, Italy) Anna Maffioletti ([1] 2Dipartimento di Economia Politica, Università di Torino, Italy [2] 3School of Economic Studies, University of Hull, UK)
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In a laboratory experiment we test the hypothesis that consumers' valuation of insurance is sensitive to the amount of information available on the probability of a potential loss. In order to test this hypothesis we simulate a market in which we elicit individuals' willingness to pay to insure against a loss characterised either by known or else vague probabilities. We use two distinct treatments by providing subjects with different information over the vague probabilities of loss. In general we find that uncertainty about probabilities has a weak impact on consumers' valuation of insurance. However, additional information about probabilities tends to marginally increase the price individuals are willing to pay to insure themselves. Implications for the insurance market are derived. The Geneva Papers on Risk and Insurance Theory (2001) 26, 195–224. doi:10.1023/A:1015277619421
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Volume (Year): 26 (2001) Issue (Month): 3 (December) Pages: 195-224 Download reference. The following formats are available: HTML
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