Risk Aversion, Loss Aversion, and the Demand for Insurance

Louis Eeckhoudt (), Anna Fiori and Emanuela Rosazza Gianin
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Louis Eeckhoudt: LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - Université de Lille - CNRS - Centre National de la Recherche Scientifique
Anna Fiori: UNIMIB - Università degli Studi di Milano-Bicocca = University of Milano-Bicocca
Emanuela Rosazza Gianin: UNIMIB - Università degli Studi di Milano-Bicocca = University of Milano-Bicocca

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Abstract: In this paper we analyze insurance demand when the utility function depends both upon final wealth and the level of losses or gains relative to a reference point. Besides some comparative statics results, we discuss the links with first-order risk aversion, with the Omega measure, and with a tendency to over-insure modest risks that has been been extensively documented in real insurance markets.

Keywords: first-order risk aversion; stochastic dominance; insurance; expected utility (search for similar items in EconPapers)
Date: 2018-06
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Citations: View citations in EconPapers (6)

Published in Risks, 2018, 6 (2), pp.60. ⟨10.3390/risks6020060⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02987006

DOI: 10.3390/risks6020060

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