Catastrophic risk: Social influences on insurance decisions

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Abstract

We study behavioral patterns of insurance demand for low-probability large-loss events (catastrophic losses). Individual patterns of belief formation and risk attitude that were suggested in the behavioral decisions literature emerge robustly in the current set of insurance choices. However, social comparison effects are less robust. We do not find any evidence for peer effects (through social-loss aversion or imitation) on insurance take-up. In contrast, we find support for the prediction that people underweight others’ relevant information in their own decision making.
Original languageEnglish
Pages (from-to)309-326
JournalTheory and Decision
Volume82
Issue number3
Early online dateSep 2016
DOIs
Publication statusPublished - Mar 2017

Keywords

  • insurance
  • risk attitudes
  • beliefs
  • catastrophic risk

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