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A note on increased probability of loss and the demand for insurance

Author

Listed:
  • You-Song Jang

    (Korea Institute of Finance, 110-110 Seoul Korea)

  • Josef Hadar

    (Department of Economics, Southern Methodist University, 75275 Dallas TX)

Abstract

It is shown that the effect of increased probability of loss on the demand for insurance depends on whether both insured and insurer are aware of the change. When both insurer and insured share the same beliefs about the probability of loss (symmetric information), an increase in the loss probability may lead risk-averse agents to demand less insurance. The Geneva Papers on Risk and Insurance Theory (1995) 20, 213–216. doi:10.1007/BF01258398

Suggested Citation

  • You-Song Jang & Josef Hadar, 1995. "A note on increased probability of loss and the demand for insurance," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 20(2), pages 213-216, December.
    • Handle: RePEc:pal:genrir:v:20:y:1995:i:2:p:213-216
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    Cited by:

    1. Loubergé, Henri & Watt, Richard, 2008. "Insuring a risky investment project," Insurance: Mathematics and Economics, Elsevier, vol. 42(1), pages 301-310, February.
    2. Richard Watt & Henri Loubergé, 2005. "On the Demand for Budget Constrained Insurance," FAME Research Paper Series rp137, International Center for Financial Asset Management and Engineering.
    3. Timo R. Lambregts & Paul Bruggen & Han Bleichrodt, 2021. "Insurance decisions under nonperformance risk and ambiguity," Journal of Risk and Uncertainty, Springer, vol. 63(3), pages 229-253, December.

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