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I Learn, You Learn, We Gain. Experience in Crop Insurance Markets

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  • Santeramo, Fabio Gaetano

Abstract

The relevance and the impact of experience in insurance markets are underinvestigated. From Italian farm-level data we estimate a dynamic discrete choice model of participation to investigate the role of experience. The methodology, coupled with exploratory analysis, allows one to compare how different sources of experience influence the crop insurance decision making process. We found that direct experience is a catalyst for insurance participation of medium and large farms. The experience indirectly acquired is also relevant, especially for small farms. Policy implications are discussed: in particular, we discuss on the importance of information campaigns and of bolstering uptake to exploit the advantages of the inertia and spillover effects that emerge from experience.

Suggested Citation

  • Santeramo, Fabio Gaetano, 2016. "I Learn, You Learn, We Gain. Experience in Crop Insurance Markets," MPRA Paper 86379, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:86379
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    2. Tappi, Marco & Nardone, Gianluca & Santeramo, Fabio, 2022. "On the relationships among durum wheat yields and weather conditions: evidence from Apulia region, Southern Italy," MPRA Paper 112888, University Library of Munich, Germany.
    3. Rippo, Ruggiero & Cerroni, Simone, 2021. "Farmers’ Participation in the Income Stabilization Tool: Evidence from the Apple Sector in Italy," 2021 Conference, August 17-31, 2021, Virtual 315191, International Association of Agricultural Economists.
    4. Marco Rogna & Günter Schamel & Alex Weissensteiner, 2019. "Modeling the Switch from Hail Insurance to Anti-Hail Nets," BEMPS - Bozen Economics & Management Paper Series BEMPS64, Faculty of Economics and Management at the Free University of Bozen.
    5. Bertolozzi-Caredio, Daniele & Bardají, Isabel & Garrido, Alberto & Berry, Robert & Bijttebier, Jo & Gavrilescu, Camelia & Harizanova, Hristina & Jendrzejewski, Błażej & Meuwissen, Miranda M.P. & Ollen, 2021. "Stakeholder perspectives to improve risk management in European farming systems," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 147-161.
    6. Giampietri, Elisa & Yu, Xiaohua & Trestini, Samuele, 2020. "The role of trust and perceived barriers on farmer’s intention to adopt risk management tools," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 9(1), April.
    7. Coletta, Attilio & Giampietri, Elisa & Santeramo, Fabio Gaetano & Severini, Simone & Trestini, Samuele, 2018. "A preliminary test on risk and ambiguity attitudes, and time preferences in decisions under uncertainty: towards a better explanation of participation in crop insurance schemes," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 7(3), December.
    8. Angela Barbuto & Antonio Lopolito & Fabio Gaetano Santeramo, 2019. "Improving diffusion in agriculture: an agent-based model to find the predictors for efficient early adopters," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 7(1), pages 1-12, December.
    9. Santeramo, Fabio Gaetano & Lamonaca, Emilia, 2020. "Objective risk and subjective risk: The role of information in food supply chains," MPRA Paper 104515, University Library of Munich, Germany.

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    More about this item

    Keywords

    Direct Experience; Dynamic Probit; Imperfect Knowledge; Indirect Experience; State Dependence;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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