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Insurance decisions under nonperformance risk and ambiguity

An important societal problem is that people underinsure against risks that are unlikely or occur in the far future, such as natural disasters and long-term care needs. One explanation is that uncertainty about the risk of non-reimbursement induces ambiguity averse and risk prudent decision makers t...

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Autores principales: Lambregts, Timo R., van Bruggen, Paul, Bleichrodt, Han
Formato: Online Artículo Texto
Lenguaje:English
Publicado: Springer US 2021
Materias:
Acceso en línea:https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8625686/
https://www.ncbi.nlm.nih.gov/pubmed/34866790
http://dx.doi.org/10.1007/s11166-021-09364-7
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author Lambregts, Timo R.
van Bruggen, Paul
Bleichrodt, Han
author_facet Lambregts, Timo R.
van Bruggen, Paul
Bleichrodt, Han
author_sort Lambregts, Timo R.
collection PubMed
description An important societal problem is that people underinsure against risks that are unlikely or occur in the far future, such as natural disasters and long-term care needs. One explanation is that uncertainty about the risk of non-reimbursement induces ambiguity averse and risk prudent decision makers to take out less insurance. We set up an insurance experiment to test this explanation. Consistent with the theoretical predictions, we find that the demand for insurance is lower when the nonperformance risk is ambiguous than when it is known and when decision makers are risk prudent. We cannot attribute the lower take-up of insurance to our measure of ambiguity aversion, probably because ambiguity attitudes are richer than aversion alone. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s11166-021-09364-7.
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spelling pubmed-86256862021-11-29 Insurance decisions under nonperformance risk and ambiguity Lambregts, Timo R. van Bruggen, Paul Bleichrodt, Han J Risk Uncertain Article An important societal problem is that people underinsure against risks that are unlikely or occur in the far future, such as natural disasters and long-term care needs. One explanation is that uncertainty about the risk of non-reimbursement induces ambiguity averse and risk prudent decision makers to take out less insurance. We set up an insurance experiment to test this explanation. Consistent with the theoretical predictions, we find that the demand for insurance is lower when the nonperformance risk is ambiguous than when it is known and when decision makers are risk prudent. We cannot attribute the lower take-up of insurance to our measure of ambiguity aversion, probably because ambiguity attitudes are richer than aversion alone. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s11166-021-09364-7. Springer US 2021-11-26 2021 /pmc/articles/PMC8625686/ /pubmed/34866790 http://dx.doi.org/10.1007/s11166-021-09364-7 Text en © The Author(s) 2021, corrected publication 2022 https://creativecommons.org/licenses/by/4.0/Open AccessThis article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ (https://creativecommons.org/licenses/by/4.0/) .
spellingShingle Article
Lambregts, Timo R.
van Bruggen, Paul
Bleichrodt, Han
Insurance decisions under nonperformance risk and ambiguity
title Insurance decisions under nonperformance risk and ambiguity
title_full Insurance decisions under nonperformance risk and ambiguity
title_fullStr Insurance decisions under nonperformance risk and ambiguity
title_full_unstemmed Insurance decisions under nonperformance risk and ambiguity
title_short Insurance decisions under nonperformance risk and ambiguity
title_sort insurance decisions under nonperformance risk and ambiguity
topic Article
url https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8625686/
https://www.ncbi.nlm.nih.gov/pubmed/34866790
http://dx.doi.org/10.1007/s11166-021-09364-7
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