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.
| Dokumententyp: | Zeitschriftenartikel |
|---|---|
| Fakultät: | Betriebswirtschaft |
| Themengebiete: | 300 Sozialwissenschaften > 330 Wirtschaft |
| URN: | urn:nbn:de:bvb:19-epub-106245-5 |
| ISSN: | 1554-964X |
| Sprache: | Englisch |
| Dokumenten ID: | 106245 |
| Datum der Veröffentlichung auf Open Access LMU: | 11. Sep. 2023, 13:36 |
| Letzte Änderungen: | 12. Sep. 2023, 08:06 |
| DFG: | Gefördert durch die Deutsche Forschungsgemeinschaft (DFG) - 491502892 |
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