A Microeconometric Analysis of Risk Aversion and the Decision to Self-Insure
This study estimates a von Neumann-Morgenstern utility function using market data and microeconometric methods. The authors investigate the decision whether to purchase insurance against the risk of telephone line trouble in the home. Using the choices of approximately 10,000 residential customers, they determine the shape of the utility function and the degree of risk aversion. The authors find that risk aversion varies systematically in the population and varies with the level of income, and that the observed choice behavior is consistent with expected utility maximization. Copyright 1994 by University of Chicago Press.
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References listed on IDEAS
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- Borch, Karl, 1986. "Insurance and Giffen's paradox," Economics Letters, Elsevier, vol. 20(4), pages 303-306.
- Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, vol. 80(3), pages 353-374, June.
- Shogren, Jason F., 1990.
"Impact of Self-Protection and Self-Insurance on Individual Response to Risk (The),"
Staff General Research Papers Archive
297, Iowa State University, Department of Economics.
- Jason F. Shogren, 1990. "Impact of Self-Protection and Self-Insurance on Individual Response to Risk, The," Center for Agricultural and Rural Development (CARD) Publications 90-wp53, Center for Agricultural and Rural Development (CARD) at Iowa State University.
- Briys, Eric & Dionne, Georges & Eeckhoudt, Louis, 1989. "More on Insurance as a Giffen Good," Journal of Risk and Uncertainty, Springer, vol. 2(4), pages 415-420, December.
- Briys, E. & Dionne, G. & Eeckhoudt, L., 1988. "More On Insurance As A Giffen Good," Cahiers de recherche 8813, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
- Briys, E. & Dionne, G. & Eeckhoudt, L., 1988. "More on Insurance As a Giffen Good," Cahiers de recherche 8813, Universite de Montreal, Departement de sciences economiques.
- Shogren, Jason F, 1990. "The Impact of Self-protection and Self-insurance on Individual Response to Risk," Journal of Risk and Uncertainty, Springer, vol. 3(2), pages 191-204, June. Full references (including those not matched with items on IDEAS)
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