Background Risk, Demand for Insurance, and Choquet Expected Utility Preferences

Meglena Jeleva ()

The Geneva Risk and Insurance Review, 2000, vol. 25, issue 1, 7-28

Abstract: This article deals with demand for insurance with a background risk in a nonprobabilized uncertainty framework, where preferences are represented by a nonadditive model of decision making. The Choquet expected utility model that we use generalizes expected utility and allows for a separation of the attitude towards uncertainty and the attitude towards wealth. When the insurable and the background risk are comonotone, the impact of the background risk on the demand for insurance is related to the attitude towards wealth. In contrast, when the two risks are anticomonotone, the attitude towards uncertainty is determinant. In this case, some of the resulting behaviors cannot be explained by the standard expected utility model. The Geneva Papers on Risk and Insurance Theory (2000) 25, 7–28. doi:10.1023/A:1008730106771

Date: 2000
References: Add references at CitEc
Citations: View citations in EconPapers (13)

Downloads: (external link)
http://www.palgrave-journals.com/grir/journal/v25/n1/pdf/grir2000119a.pdf Link to full text PDF (application/pdf)
http://www.palgrave-journals.com/grir/journal/v25/n1/full/grir2000119a.html Link to full text HTML (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Background Risk, Demand for Insurance and Choquet Expected Utility Preferences (1998)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:genrir:v:25:y:2000:i:1:p:7-28

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/10713

Access Statistics for this article

The Geneva Risk and Insurance Review is currently edited by Michael Hoy and Nicolas Treich

More articles in The Geneva Risk and Insurance Review from Palgrave Macmillan, International Association for the Study of Insurance Economics (The Geneva Association) Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().