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Black Swan Protection: an Experimental Investigation

Author

Listed:
  • Ozlem Ozdemir

    (Middle East Technical University, Department of Business Administration, Ankara, Turkey)

  • Andrea Morone

    (Università degli Studi di Bari, Aldo Moro Dipartimento di Studi Aziendali e Giusprivatistici, Bari, Italy and LEE-Economics Department, Universitat Jaume I, Castellón, Spain)

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.

Suggested Citation

  • Ozlem Ozdemir & Andrea Morone, 2012. "Black Swan Protection: an Experimental Investigation," Working Papers 2012/12, Economics Department, Universitat Jaume I, Castellón (Spain).
    • Handle: RePEc:jau:wpaper:2012/12
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    References listed on IDEAS

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    More about this item

    Keywords

    Black swan; Risk; Insurance; Low probability; High loss; Experiment;
    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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    This paper has been announced in the following NEP Reports:

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