A note on increased probability of loss and the demand for insurance

You-Song Jang and Josef Hadar
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You-Song Jang: Korea Institute of Finance, 110-110 Seoul Korea
Josef Hadar: Department of Economics, Southern Methodist University, 75275 Dallas TX

The Geneva Risk and Insurance Review, 1995, vol. 20, issue 2, 213-216

Abstract: It is shown that the effect of increased probability of loss on the demand for insurance depends on whether both insured and insurer are aware of the change. When both insurer and insured share the same beliefs about the probability of loss (symmetric information), an increase in the loss probability may lead risk-averse agents to demand less insurance. The Geneva Papers on Risk and Insurance Theory (1995) 20, 213–216. doi:10.1007/BF01258398

Date: 1995
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