Journal article
Probability weighting and insurance demand in a unified framework
The Geneva risk and insurance review, Vol.48(1), pp.63-109
03/01/2023
DOI: 10.1057/s10713-022-00074-x
Abstract
We provide a comprehensive analysis of the impact of probability weighting on optimal insurance demand in a unified framework. We identify decreasing relative overweighting as a new local condition on the probability weighting function that is useful for comparative static analysis. We discuss the effects of probability weighting on coinsurance, deductible choice, insurance demand for low-probability, high-impact risks versus high-probability, low-impact risks, and insurance demand in the presence of nonperformance risk. Probability weighting can make better or worse predictions than expected utility depending on the insurance demand problem at hand.
Details
- Title: Subtitle
- Probability weighting and insurance demand in a unified framework
- Creators
- Johannes G. Jaspersen - LMU KlinikumRichard Peter - University of IowaMarc A. Ragin - Franklin College
- Resource Type
- Journal article
- Publication Details
- The Geneva risk and insurance review, Vol.48(1), pp.63-109
- DOI
- 10.1057/s10713-022-00074-x
- ISSN
- 1554-964X
- eISSN
- 1554-9658
- Publisher
- Palgrave Macmillan UK
- Grant note
- Ludwig-Maximilians-Universität München (1024) Non Given / Deutscher Verein für Versicherungswissenschaft
- Language
- English
- Date published
- 03/01/2023
- Academic Unit
- Finance
- Record Identifier
- 9984380486502771
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