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An experimental investigation of insurance decisions in low probability and high loss risk situations

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  • Ozlem Ozdemir
  • Andrea Morone

Abstract

This experimental study investigates insurance decisions in low-probability, high-loss risk situations. Results indicate that subjects consider the probability of loss (loss size) when they make buying decisions (paying decisions). Most individuals are risk averse with no specific threshold probability. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Ozlem Ozdemir & Andrea Morone, 2014. "An experimental investigation of insurance decisions in low probability and high loss risk situations," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 9(1), pages 53-67, April.
    • Handle: RePEc:spr:jeicoo:v:9:y:2014:i:1:p:53-67
    DOI: 10.1007/s11403-013-0112-2
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    More about this item

    Keywords

    Risk; Insurance; Low probability; High loss ; Experiment; C91; D81;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty

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