A Study on Revenue Insurance Buying for Custard Apple in Taiwan: Perspectives from Prospect Theory and Ambiguity Preference

Min-Hsien Yang and Richard Lu

International Journal of Food and Agricultural Economics (IJFAEC), 2022, vol. 10, issue 2

Abstract: This paper studies why the demand for Agricultural revenue insurance is so low in Taiwan even the government subsidize almost half of the premium. We look into how risk attitude, probability ambiguity and claim payment ambiguity can affect the lower demand of the insurance, and control factors like age, education, farming experience, scale, and loan borrowing. By the survey data of 199 farmers, we find that half of the sample farmers are kind of risk lovers, and, about half of them haver problem of probability ambiguity or claim payment ambiguity. By using the two-class logistic model of insurance buying or no buying, we find that the risk attitude as risk aversion has significant positive impacts on the insurance buying, or the risk lover has less demand for the insurance. However, the probability ambiguity and claim payment ambiguity, which are expected to have negative impacts on the insurance demand, is not statistically significant.

Keywords: Agribusiness; Agricultural and Food Policy; Agricultural Finance; Consumer/Household Economics; Farm Management; Risk and Uncertainty (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ags:ijfaec:321779

DOI: 10.22004/ag.econ.321779

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