Leaving the market or reducing the coverage? A model-based experimental analysis of the demand for insurance

Anne Corcos (), François Pannequin and Claude Montmarquette
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Anne Corcos: CNRS, Université de Picardie

Experimental Economics, 2017, vol. 20, issue 4, No 5, 836-859

Abstract: Abstract This study develops a theoretical, and experimental analysis addressing the issue of premium variations on the demand for insurance. Accounting for risk attitudes, our contribution disentangles the decision to buy insurance from the conditional demand (the non-null demand for insurance). Partially validating our theoretical predictions, our experimental results show that, when it has an effect, a non-massive increase in the premium (either in the unit price or the fixed cost) exclusively results in an exit from the insurance market (the risk lovers first, then the risk averters). Moreover, our study highlights a key feature of risk-seeking agents' behavior; they exhibit behavior consistent with gambling and opportunism rather than a lack of interest in insurance.

Keywords: Demand for insurance; Conditional demand; Decision to buy insurance; Risk attitude; Experimental study (search for similar items in EconPapers)
JEL-codes: C91 D81 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (12)

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DOI: 10.1007/s10683-017-9513-8

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