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

Fingerprint

Insurance
insurance
imitation
Decision making
decision making
event
demand
evidence
Social influence
Catastrophic risk
Social Influence
Imitation
Prediction
Risk attitude
Loss aversion
Catastrophic events
Lower probabilities
demand for insurance
Peer effects
Social comparison

Keywords

  • insurance
  • risk attitudes
  • beliefs
  • catastrophic risk

Cite this

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title = "Catastrophic risk: Social influences on insurance decisions",
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.",
keywords = "insurance, risk attitudes, beliefs, catastrophic risk",
author = "Michal Krawczyk and Stefan Trautmann and {van de Kuilen}, Gijs",
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Catastrophic risk : Social influences on insurance decisions. / Krawczyk, Michal; Trautmann, Stefan; van de Kuilen, Gijs.

In: Theory and Decision, Vol. 82, No. 3, 03.2017, p. 309-326.

Research output: Contribution to journalArticleScientificpeer-review

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AU - Krawczyk, Michal

AU - Trautmann, Stefan

AU - van de Kuilen, Gijs

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AB - 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.

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KW - risk attitudes

KW - beliefs

KW - catastrophic risk

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JO - Theory and Decision

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