IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v59y2019i5p2993-3027.html
   My bibliography  Save this article

Betting on temperature: psychological bias in insurance purchases

Author

Listed:
  • Dongmin Kong
  • Ni Qin
  • Zhijian Feng
  • Shasha Liu

Abstract

We examine effects of psychological bias on insurance purchases. In 2014, a Chinese insurance company provided high‐temperature insurance, compensating the insured if days with temperature ≥37°C beat the deductible threshold. Although the possibility of a claim is nearly zero and perfectly predicted by the historical temperatures, individual decisions are over‐influenced by the current temperature. A 1 percent increase in hourly temperature is associated with a 3.1 percent increase in hourly sales. The bias is more pronounced with extremely high temperature periods, for young people, and for individuals with a preference for gambling and with easy access to the Internet. We present the importance of psychological bias in understanding individual decisions.

Suggested Citation

  • Dongmin Kong & Ni Qin & Zhijian Feng & Shasha Liu, 2019. "Betting on temperature: psychological bias in insurance purchases," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(5), pages 2993-3027, December.
    • Handle: RePEc:bla:acctfi:v:59:y:2019:i:5:p:2993-3027
    DOI: 10.1111/acfi.12565
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/acfi.12565
    Download Restriction: no
    File URL: https://libkey.io/10.1111/acfi.12565?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:59:y:2019:i:5:p:2993-3027. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.