Advanced Search
MyIDEAS: Login

“Influence of the claimant’s behavioural features on motor compensation outcomes”

Contents:

Author Info

  • Mercedes Ayuso

    ()
    (Universitat de Barcelona, Department of Econometrics, Statistics and Spanish Economy)

  • Lluís Bermúdez

    ()
    (Universitat de Barcelona, Department of Financial and Actuarial Mathematics)

  • Miguel Santolino

    ()
    (Universitat de Barcelona, Department of Econometrics, Statistics and Spanish Economy)

Registered author(s):

    Abstract

    The decision to settle a motor insurance claim by either negotiation or trial is analysed. This decision may depend on how risk and confrontation adverse or pessimistic the claimant is. The extent to which these behavioural features of the claimant might influence the final compensation amount are examined. An empirical analysis, fitting a switching regression model to a Spanish database, is conducted in order to analyze whether the choice of the conflict resolution procedure is endogenous to the compensation outcomes. The results show that compensations awarded by courts are always higher, although 95% of cases are settled by negotiation. We show that this is because claimants are adverse to risk and confrontation, and are pessimistic about their chances at trial. By contrast, insurers are risk /confrontation neutral and more objective in relation to the expected trial compensation. During the negotiation insurers accept to pay the subjective compensation values of claimants, since these values are lower than their estimates of compensations at trial.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.ub.edu/irea/working_papers/2011/201108.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201108.

    as in new window
    Length: 37 pages
    Date of creation: Jun 2011
    Date of revision: Jun 2011
    Handle: RePEc:ira:wpaper:201108

    Contact details of provider:
    Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
    Web page: http://www.ub.edu/irea/
    More information through EDIRC

    Related research

    Keywords: Risk aversion; Negotiation; Trial; Switching regression; Confrontation preference. JEL classification: D81; K41; J33;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Browne, Mark J & Puelz, Robert, 1999. "The Effect of Legal Rules on the Value of Economic and Non-economic Damages and the Decision to File," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 189-213, August.
    2. Barry Nalebuff, 1987. "Credible Pretrial Negotiation," RAND Journal of Economics, The RAND Corporation, vol. 18(2), pages 198-210, Summer.
    3. George L. Priest & Benjamin Klein, 1984. "The Selection of Disputes for Litigation," The Journal of Legal Studies, University of Chicago Press, vol. 13(1), pages 1-56, January.
    4. Grochulski, Borys & Kareken, John, 2004. "Allen and Gale on risk-taking and competition in banking," Finance Research Letters, Elsevier, vol. 1(4), pages 236-240, December.
    5. Michael Lokshin & Zurab Sajaia, 2004. "Maximum likelihood estimation of endogenous switching regression models," Stata Journal, StataCorp LP, vol. 4(3), pages 282-289, September.
    6. Hay, Bruce L, 1996. "Contingent Fees and Agency Costs," The Journal of Legal Studies, University of Chicago Press, vol. 25(2), pages 503-33, June.
    7. Hughes, James W & Snyder, Edward A, 1995. "Litigation and Settlement under the English and American Rules: Theory and Evidence," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 225-50, April.
    8. Mark J. Browne & Joan T. Schmit, 2008. "Litigation Patterns in Automobile Bodily Injury Claims 1977-1997: Effects of Time and Tort Reforms," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 83-100.
    9. Helen I. Doerpinghaus & Joan T. Schmit & Jason Jia-Hsing Yeh, 2008. "Age and Gender Effects on Auto Liability Insurance Payouts," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(3), pages 527-550.
    10. Ellen Garbarino & Robert Slonim & Justin Sydnor, 2011. "Digit ratios (2D:4D) as predictors of risky decision making for both sexes," Journal of Risk and Uncertainty, Springer, vol. 42(1), pages 1-26, February.
    11. Santolino, Miguel, 2010. "Determinants of the decision to appeal against motor bodily injury judgements made by Spanish trial courts," International Review of Law and Economics, Elsevier, vol. 30(1), pages 37-45, March.
    12. Cooter, Robert D & Rubinfeld, Daniel L, 1989. "Economic Analysis of Legal Disputes and Their Resolution," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1067-97, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ira:wpaper:201108. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Alicia García).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.