Framing, Probability Distortions, and Insurance Decisions

Eric J. Johnson, John Hershey, Jacqueline Meszaros and Howard Kunreuther
Additional contact information
Eric J. Johnson: University of Pennsylvania, The Wharton School, Marketing Department
John Hershey: University of Pennsylvania, The Wharton School, Department of Operations and Information Management
Jacqueline Meszaros: Temple University, School of Business and Management, Department of General and Strategic Management
Howard Kunreuther: University of Pennsylvania, The Wharton School, Department of Operations and Information Management

A chapter in Making Decisions About Liability And Insurance, 1993, pp 35-51 from Springer

Abstract: Abstract A series of studies examines whether certain biases in probability assessments and perceptions of loss, previously found in experimental studies, affect consumers’ decisions about insurance. Framing manipulations lead the consumers studied here to make hypothetical insurance-purchase choices that violate basic laws of probability and value. Subjects exhibit distortions in their perception of risk and framing effects in evaluating premiums and benefits. Illustrations from insurance markets suggest that the same effects occur when consumers make actual insurance purchases.

Keywords: insurance decisions; biases; probability distortions; framing (search for similar items in EconPapers)
Date: 1993
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DOI: 10.1007/978-94-011-2192-7_3

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