Do Disaster Experience and Knowledge Affect Insurance Take-up Decisions?

Jing Cai and Changcheng Song

No 22403, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This study examines the effect of experience and knowledge on weather insurance adoption. First, we conduct insurance games with farmers, and find that the treatment improves real insurance take-up by 46%. The effect is not driven by changes in risk attitudes and perceived probability of disasters, or by learning of insurance benefits, but is driven by the experience acquired in the game. Second, we find that providing information about the payout probability has a strong positive effect on insurance take-up. Finally, when subjects receive both treatments, the probability information has a greater impact on take-up than does the disaster experience.

JEL-codes: D03 D14 G22 M31 O16 O33 Q12 (search for similar items in EconPapers)
Date: 2016-07
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Published as Jing Cai & Changcheng Song, 2016. "Do disaster experience and knowledge affect insurance take-up decisions?," Journal of Development Economics, .

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