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Uncertainty, Ambiguity and Risk Taking: an experimental investigation of consumer behavior and demand for insurance

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  • Jean Desrochers
  • J. Francois Outreville

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    Abstract

    The purpose of this paper is to examine whether people treat all forms of uncertainty in the same way. Studies investigating known-risk gambles and ambiguous gambles have systematically used the urn context. Little systematic research has investigated differences in expressed attitude as a function of the manner in which vague probability information is communicated to a decision maker. The experiments reported in this paper examine the behavior of people when faced with different situations with and without an insurance context: a risky situation (the probability of loss is known), an uncertain situation (there is no prior information on the probability of loss) or an ambiguous (the information provided is vague).

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    Bibliographic Info

    Paper provided by ICER - International Centre for Economic Research in its series ICER Working Papers with number 10-2013.

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    Length: 27 pages
    Date of creation: Nov 2013
    Date of revision:
    Handle: RePEc:icr:wpicer:10-2013

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    Keywords: Risk behavior; ambiguity aversion; insurance purchase;

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