NDLI: Demand for fixed-price multi-year contracts: Experimental evidence from insurance decisions

Content Provider	Springer Nature Link
Author	Kunreuther, Howard Michel Kerjan, Erwann
Copyright Year	2015
Abstract	Do individuals prefer a fixed-price multi-year insurance (MYI) policy to current annual contracts with fluctuating prices? If so, are they willing to pay more for these policies? In a web-based 2-period repeated game with significant real money at stake, individuals have an opportunity to purchase 1-period insurance contracts, 2-period contracts or no insurance against the risk of a hurricane causing damage to their property. When premiums for both insurance options are actuarially fair, more than five times as many people favor the 2-period contract over the 1-period contract. The demand for a 2-period contract remains high even with a loading cost of 5% and 10% while keeping the 1-period premium actuarially fair, indicating a preference for stable premiums over time. These findings support the need for multi-year contracts that will lead more individuals to be adequately protected against future extreme events, given the empirical evidence on lack of interest in insurance against catastrophic risks.
Starting Page	171
Ending Page	194
Page Count	24
File Format	PDF
ISSN	08955646
Journal	Journal of Risk and Uncertainty
Volume Number	51
Issue Number	2
e-ISSN	15730476
Language	English
Publisher	Springer US
Publisher Date	2015-11-21
Publisher Place	New York
Access Restriction	One Nation One Subscription (ONOS)
Subject Keyword	Individual decision-making Choice under uncertainty Multi-year insurance Disaster Economic Theory/Quantitative Economics/Mathematical Methods Microeconomics Operation Research/Decision Theory Environmental Economics
Content Type	Text
Resource Type	Article
Subject	Finance Accounting Economics and Econometrics

Sl.	Authority	Responsibilities	Communication Details
1	Ministry of Education (GoI), Department of Higher Education	Sanctioning Authority	https://www.education.gov.in/ict-initiatives
2	Indian Institute of Technology Kharagpur	Host Institute of the Project: The host institute of the project is responsible for providing infrastructure support and hosting the project	https://www.iitkgp.ac.in
3	National Digital Library of India Office, Indian Institute of Technology Kharagpur	The administrative and infrastructural headquarters of the project	Dr. B. Sutradhar bsutra@ndl.gov.in
4	Project PI / Joint PI	Principal Investigator and Joint Principal Investigators of the project	Dr. B. Sutradhar bsutra@ndl.gov.in Prof. Saswat Chakrabarti will be added soon
5	Website/Portal (Helpdesk)	Queries regarding NDLI and its services	support@ndl.gov.in
6	Contents and Copyright Issues	Queries related to content curation and copyright issues	content@ndl.gov.in
7	National Digital Library of India Club (NDLI Club)	Queries related to NDLI Club formation, support, user awareness program, seminar/symposium, collaboration, social media, promotion, and outreach	clubsupport@ndl.gov.in
8	Digital Preservation Centre (DPC)	Assistance with digitizing and archiving copyright-free printed books	dpc@ndl.gov.in
9	IDR Setup or Support	Queries related to establishment and support of Institutional Digital Repository (IDR) and IDR workshops	idr@ndl.gov.in

Representativeness and managing catastrophe risk

Excluded losses and the demand for insurance

Estimating ambiguity preferences and perceptions in multiple prior models: Evidence from the field

An experimental investigation of violations of transitivity in choice under uncertainty

Dynamic Decision-Making Under Uncertainty: An Experimental Investigation of Choices Between Accumulator Gambles

Is there a demand for multi-year crop insurance?

A theory of medical decision making under uncertainty

Behavioral bias and the demand for bicycle and flood insurance

Group decision rules and group rationality under risk

Demand for fixed-price multi-year contracts: Experimental evidence from insurance decisions

Similar Documents

Representativeness and managing catastrophe risk

Excluded losses and the demand for insurance

Estimating ambiguity preferences and perceptions in multiple prior models: Evidence from the field

An experimental investigation of violations of transitivity in choice under uncertainty

Dynamic Decision-Making Under Uncertainty: An Experimental Investigation of Choices Between Accumulator Gambles

Is there a demand for multi-year crop insurance?

A theory of medical decision making under uncertainty

Behavioral bias and the demand for bicycle and flood insurance

Group decision rules and group rationality under risk

Demand for fixed-price multi-year contracts: Experimental evidence from insurance decisions