Alternative Models of Choice under Uncertainty and Demand for Health Insurance
The authors test a standard expected utility model and alternative models about how people evaluate risky prospects using data about individuals' preferences among health insurance plans. A model that assumes people evaluate gains and losses relative to a reference rather than final outcomes, treat gains and losses asymmetrically, and process certain and uncertain outcomes separately provides a better fit than the standard utility model. These findings suggest inertia in health insurance plan choice and that individuals are more responsive to decreases than to increases in the price of insurance. Copyright 1996 by MIT Press.
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Volume (Year): 78 (1996)
Issue (Month): 3 (August)
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- Camerer, Colin F, 1989. "An Experimental Test of Several Generalized Utility Theories," Journal of Risk and Uncertainty, Springer, vol. 2(1), pages 61-104, April.
- Sugden, Robert, 1986. "New Developments in the Theory of Choice under Uncertainty," Bulletin of Economic Research, Wiley Blackwell, vol. 38(1), pages 1-24, January.
- Battalio, Raymond C & Kagel, John H & Jiranyakul, Komain, 1990. "Testing between Alternative Models of Choice under Uncertainty: Some Initial Results," Journal of Risk and Uncertainty, Springer, vol. 3(1), pages 25-50, March.
- Samuelson, William & Zeckhauser, Richard, 1988. "Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
- Camerer, Colin & Kunreuther, Howard, 1989. "Experimental Markets for Insurance," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 265-299, September.
- Holmer, Martin, 1984. "Tax policy and the demand for health insurance," Journal of Health Economics, Elsevier, vol. 3(3), pages 203-221, December.
- Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
- Thaler, Richard, 1980. "Toward a positive theory of consumer choice," Journal of Economic Behavior & Organization, Elsevier, vol. 1(1), pages 39-60, March.
- Harry Markowitz, 1952. "The Utility of Wealth," Journal of Political Economy, University of Chicago Press, vol. 60, pages 151-151.
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