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Behavioral insurance: Theory and experiments

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  • Andreas Richter

    ()

  • Jörg Schiller

    ()

  • Harris Schlesinger

    ()

Abstract

“Risk and insurance” provides an illustrative set of decisions made in the presence of uncertainty. As behavioral models become more integrated into economics and finance, many of their effects are illustrated quite well within insurance markets. Especially noteworthy are the complementary roles of theory and experiments. This article reviews the interactive role of experiments and theory in analyzing insurance demand from a behavioral perspective. We pay special attention to several models of underinvestment in insurance or in other risk-mitigation markets. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Andreas Richter & Jörg Schiller & Harris Schlesinger, 2014. "Behavioral insurance: Theory and experiments," Journal of Risk and Uncertainty, Springer, vol. 48(2), pages 85-96, April.
  • Handle: RePEc:kap:jrisku:v:48:y:2014:i:2:p:85-96
    DOI: 10.1007/s11166-014-9188-x
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Mark Browne & Christian Knoller & Andreas Richter, 2015. "Behavioral bias and the demand for bicycle and flood insurance," Journal of Risk and Uncertainty, Springer, vol. 50(2), pages 141-160, April.
    2. Cettolin, Elena & Tausch, Franziska, 2016. "Risk taking and risk sharing: does responsibility matter? (RM/13/045-revised-)," Research Memorandum 018, Maastricht University, Graduate School of Business and Economics (GSBE).
    3. repec:kap:regeco:v:51:y:2017:i:1:d:10.1007_s11149-017-9317-y is not listed on IDEAS
    4. François Pannequin & Anne Corcos & Claude Montmarquette, 2016. "Behavioral foundations of the substitutability between insurance and self-insurance: An experimental study," CIRANO Working Papers 2016s-12, CIRANO.
    5. Daniel Stein & Jeremy Tobacman, 2016. "Weather Insurance Savings Accounts," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 41(4), pages 677-700, October.
    6. Elena Cettolin & Franziska Tausch, 2015. "Risk taking and risk sharing: Does responsibility matter?," Journal of Risk and Uncertainty, Springer, vol. 50(3), pages 229-248, June.

    More about this item

    Keywords

    Adverse selection; Ambiguity aversion; Annuity puzzle; Behavioral economics; Catastrophe insurance; Genetic tests; Inequality aversion; Laboratory experiment; Loss aversion; Non-expected utility; C91; D03; D11; D14; D81; D82; D91; G22; I12;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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