Predicting Insurance Demand from Risk Attitudes

Jaspersen, Johannes G.; Ragin, Marc A.; Sydnor, Justin R.

doi:10.3386/w26508

Cited by 10 publications

(8 citation statements)

References 36 publications

Supporting

Mentioning

Contrasting

Unclassified

Order By: Relevance

“…We note, however, that even in the case of consequence information the correlation is very weak, which is consistent with a recent study byJaspersen et al, 2019 showing that lottery-based measures of risk aversion correlate very poorly with insurance choices even in laboratory settings.3 See https://www.healthcare.gov/glossary/total-cost-estimate/…”

supporting

confidence: 86%

Impact of Consequence Information on Insurance Choice

Samek¹,

Sydnor²

2020

Self Cite

View full text Add to dashboard Cite

Insurance choices are often hard to rationalize by standard theory and frequently appear suboptimal. A key reason may be that people are unable to map the cost-sharing features of plans to their distribution of financial consequences. We develop and experimentally test a decision aid that provides this mapping to simplify comparisons of plan options. In two experiments mirroring typical health insurance decisions, we find that when people choose plans using standard feature-based information, they violate dominance at high rates. Our distribution-based decision aid substantially reduces dominance violations, and also changes choice patterns in situations where there is no dominant option. Choice patterns under feature-based menus can be most easily rationalized by models of heuristic choices, such as minimizing premium or deductible. With the decision aid, though, significantly more people have choice patterns that are better explained by expected utility theory. We compare our distribution-based approach to an alternative of providing estimates of the expected value of costs, which is the most common decision-support available in most insurance markets. Providing expected values affects choices in a similar direction as our consequence-based approach, but in a more muted fashion, and is only about half as effective at reducing dominance violations.

show abstract

supporting

confidence: 86%

Impact of Consequence Information on Insurance Choice

Samek¹,

Sydnor²

2020

Self Cite

View full text Add to dashboard Cite

show abstract

“…This is done without them noticing it, through the way each problem is exposed to them. Evidence that people employ heuristics in a number of decisions exists (Kirchler & Hoelzl, 2017), particularly in the purchase of insurance (Jaspersen, Ragin, & Sydnor, 2019;Jaspersen & Aseervatham, 2017). This is done so the interpretation of situations is simpler and decisions are made more quickly.…”

Section: Empirical Evidence -Insurance and Behavioral Economicsmentioning

confidence: 99%

“…To understand which individual characteristics are relevant to the purchase of auto insurance, we also conduct an econometric exercise. Empirical evidence on the role of risk aversion (Jaspersen et al, 2019), income (Cohen & Siegelman, 2010;Peres, Maldonado, & Candido, 2019), marital status and schooling (Outreville, 2014) and age (Zietz, 2003) is diffuse, and for this reason will be analyzed here.…”

Section: Empirical Evidence -Insurance and Behavioral Economicsmentioning

confidence: 99%

Behavioral Economics and Auto Insurance: The Role of Biases and Heuristics

Graminha¹,

Afonso

2022

Rev. adm. contemp.

View full text Add to dashboard Cite

Objective: this paper analyzes how framing, anchoring, and certainty effects may affect the behavior of the consumer of auto insurance. Methods: an experiment was carried out, with the face-to-face application of six versions of a questionnaire with 14 questions, for 163 respondents from an educational institution. Questions were prepared to analyze the existence of the framing effect, the anchoring effect, and the certainty effect, in addition to the deductible effect (present in several insurance products). The theoretical framework of the paper is the behavioral economics. Results: younger people, singles, and men are more prone to risk. Although the findings in general corroborate the evidence in the literature, the results of the certainty effect were contrary to expectations. The payment of the deductible increased the respondents’ risk aversion. Conclusions: the existence of biases and heuristics can cause the purchase of insurance to occur in a non-optimal way. Knowledge of the decision-making process is important for insurers and consumers. It is also relevant for regulators, in order to subsidize measures aimed at market efficiency and consumer protection, through the design of an appropriate choice architecture.

show abstract

“…Isso é feito sem que percebam, por meio da forma de apresentação dos problemas aos quais estão expostas. Há evidências de que as pessoas empregam heurísticas em uma série de decisões (Kirchler & Hoelzl, 2017) e na aquisição de seguros em particular (Jaspersen, Ragin, & Sydnor, 2019;Jaspersen & Aseervatham, 2017). Isso é feito visando a simplificar a interpretação das situações e tomar decisões mais rapidamente.…”

Section: Evidências Empíricas -Seguros E Economia Comportamentalunclassified

“…Também é feito um exercício econométrico, visando a entender quais características individuais são relevantes para a compra de um seguro auto. As evidências empíricas sobre o papel da aversão ao risco (Jaspersen et al, 2019), da renda (Cohen & Siegelman, 2010;Peres, Maldonado, & Candido, 2019), estado civil e educação (Outreville, 2014) e idade (Zietz, 2003) são difusas, e por esse motivo serão aqui analisadas.…”

Section: Evidências Empíricas -Seguros E Economia Comportamentalunclassified

Economia Comportamental e Seguros de Automóveis: O Papel dos Vieses e Heurísticas

Graminha¹,

Afonso

2022

Rev. adm. contemp.

View full text Add to dashboard Cite

RESUMO Objetivo: este trabalho analisa como os efeitos de enquadramento, de ancoragem e de certeza podem influenciar o comportamento do consumidor de seguro de automóveis. Métodos: foi realizado um experimento, com a aplicação presencial de seis versões de um questionário com 14 questões, para 163 respondentes de uma instituição de ensino. Foram elaboradas perguntas visando a analisar a existência dos efeitos de ancoragem, de certeza e de enquadramento, além do efeito de franquia (presente em diversos ramos de seguros). O arcabouço teórico do trabalho é a economia comportamental. Resultados: as pessoas mais jovens, os(as) solteiros(as) e os homens possuem maior propensão ao risco. Embora os achados de forma geral corroborem as evidências da literatura, os resultados sobre o efeito de certeza foram contrários ao esperado. O pagamento da franquia aumentou a aversão ao risco dos respondentes. Conclusões: a existência de vieses e heurísticas pode fazer com que a aquisição de seguros ocorra de forma não ótima. O conhecimento do processo de tomada de decisão é importante para as seguradoras e para os consumidores. Também é relevante para os reguladores, com a finalidade de subsidiar medidas que visem à eficiência do mercado e à proteção dos consumidores, por meio do desenho de uma arquitetura de escolhas adequada.

show abstract

Predicting Insurance Demand from Risk Attitudes

Cited by 10 publications

References 36 publications

Impact of Consequence Information on Insurance Choice

Impact of Consequence Information on Insurance Choice

Behavioral Economics and Auto Insurance: The Role of Biases and Heuristics

Economia Comportamental e Seguros de Automóveis: O Papel dos Vieses e Heurísticas

Contact Info

Product

Resources

About