Health Values, Preference Inconsistency, and Insurance Demand
AbstractSeveral empirical studies provide evidence that their actual health state affects people’s attitudes towards health and medical care in hypothetical health states. In the tradition of behavioural economics this paper considers the actual health state as a point of reference and builds a model for studying the implications of this phenomenon on health insurance and on demand for medical care. It considers the insurance demand of different types of agents: naive individuals, individuals who are able to commit to medical care demand and sophisticated individuals. Furthermore, it raises the question of whether inconsistency of preferences reinforces or tones down moral hazard problems.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1634.
Date of creation: 2005
Date of revision:
health insurance; medical care; health state; behavioural economics; prospect theory; time inconsistency;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-01-29 (All new papers)
- NEP-FIN-2006-01-29 (Finance)
- NEP-HEA-2006-01-29 (Health Economics)
- NEP-IAS-2006-01-29 (Insurance Economics)
- NEP-UPT-2006-01-29 (Utility Models & Prospect Theory)
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