Contract Design and Insurance Demand

Jing Cai

No 34797, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We introduce experimental variation in the insurance contracts offered to rice farmers in China to study how contract design affects insurance takeup. We compare a single-contract offering with menus that include multiple contracts differing in premiums and payouts. Expanding the contract menu substantially increases take-up, primarily through higher adoption of the basic, lowest-cost contract. Additional experimental variation in relative prices and information provision shows that these effects are driven by context effects arising from relative price comparisons within the menu, rather than information inference. The findings highlight contract menu design as an effective supply-side tool for expanding insurance coverage.

JEL-codes: D1 D14 G22 M31 O16 Q12 (search for similar items in EconPapers)
Date: 2026-02
Note: DEV
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