On the profitability of collusion in location games
AbstractOn the basis of a real high stakes insurance experiment with small probabilities of losses, we demonstrate that concern is a more important driver of WTP for insurance than subjective probability estimates when there is ambiguity surrounding the estimate. Concern is still important when probabilities are exactly given. It also helps explaining the low probability insurance puzzle well known from the literature, where a part of individuals pays too much and a part nothing for coverage, a result we are able to replicate. In our experiment, belonging to either the group of threshold persons or to those that pay far too much, is not related to probability judgments but to the degree an individual is concerned in our decision situation. --
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Bibliographic InfoPaper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-123126.
Date of creation: 2003
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Publication status: Published in Journal of Urban Economics (2003) v.54, p.499-510
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Other versions of this item:
- Huck, Steffen & Knoblauch, Vicki & Muller, Wieland, 2003. "On the profitability of collusion in location games," Journal of Urban Economics, Elsevier, vol. 54(3), pages 499-510, November.
- Huck, Steffen & Knoblauch, Vicki & Müller, Wieland, 2002. "On the profitability of collusion in location games," Discussion Papers, Research Unit: Market Processes and Governance FS IV 02-22, Social Science Research Center Berlin (WZB).
- Huck, Steffen & Knoblauch, Vicki & Müller, Wieland, 2000. "On the profitability of collusion in location games," SFB 373 Discussion Papers 2000,23, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
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