IDEAS home Printed from
MyIDEAS: Login to save this article or follow this journal

The Impact of Loss Dimensions in Laboratory Insurance Markets

  • Arthur T. Cox
Registered author(s):

    This paper examines the impact of severity and the probabilities of losses on the behavior of decision makers in an experimental market for insurance. Two subjects were paired, with one subject acting as the insurer and the second as the insured. Eighty-one pairs of subjects were presented with four loss distributions. Their task was to determine a mutually agreeable price for zero deductible, 1 00 percent coverage for each loss situation. The four loss situations differed with respect to the exact distributions of severity and probability. However, the distributions were perceived by the subjects as equivalent in terms of the expected value and variance of the loss. The results show the probability dimension was a significant factor in the premium. Neither severity nor the reference point of the decision makers was significant. It appears gender differences may play a role but the data was not such that anything more than casual observations can be made.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL:
    Download Restriction: no

    Article provided by Western Risk and Insurance Association in its journal Journal of Insurance Issues.

    Volume (Year): 16 (1993)
    Issue (Month): 2 ()
    Pages: 29-40

    in new window

    Handle: RePEc:wri:journl:v:16:y:1993:i:2:p:29-40
    Contact details of provider:

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:wri:journl:v:16:y:1993:i:2:p:29-40. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (James Barrese)

    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.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.