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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...
Autores principales: | , , |
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Formato: | Online Artículo Texto |
Lenguaje: | English |
Publicado: |
Springer US
2021
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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. |
format | Online Article Text |
id | pubmed-8625686 |
institution | National Center for Biotechnology Information |
language | English |
publishDate | 2021 |
publisher | Springer US |
record_format | MEDLINE/PubMed |
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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