Arbitrage entre assurance et auto-assurance contre les risques naturels

Guibril Zerbo

No 2024-30, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: This article studies the effect of preferences on an individual's optimal choice between insurance demand and self-insurance in a risk context and then in an ambiguous context. The innovative idea in this paper is to introduce ambiguity about the effectiveness of self-insurance to understand the nature of the relationship between insurance demand and self-insurance demand. We show that an increase in risk aversion increases the demand for insurance and decreases the demand for self-insurance. However, when risk is introduced on the effectiveness of self-insurance, we show that the individual still prefers self-insurance to market insurance. We also show that when ambiguity is introduced on the efficacy of self-insurance, the individual always prefers market insurance to self-insurance. Finally, we determine the conditions under which the individual's self-insurance effort is higher or lower under ambiguity than risk.

Keywords: Natural risks; arbitration; insurance; self-insurance; efficacy; risk; ambiguity (search for similar items in EconPapers)
JEL-codes: D81 G22 Q54 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2024
New Economics Papers: this item is included in nep-rmg and nep-upt
References: Add references at CitEc
Citations:

Downloads: (external link)
https://economix.fr/pdf/dt/2024/WP_EcoX_2024-30.pdf (application/pdf)

Related works:
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:drm:wpaper:2024-30

Access Statistics for this paper

More papers in EconomiX Working Papers from University of Paris Nanterre, EconomiX Contact information at EDIRC.
Bibliographic data for series maintained by Valerie Mignon ( this e-mail address is bad, please contact ).