On the preference for full-coverage policies: Why do people buy too much insurance?

Journal of Economic Psychology

Volumn 29, Issue 5, 2008, Pages 747-761

  Shapira, Zur ^a   Venezia, Itzhak ^b  

^a NEW YORK UNIVERSITY   (United States)

^b HEBREW UNIVERSITY OF JERUSALEM   (Israel)

Author keywords

Anchoring; Behavioral finance; Biases; Insurance pricing

Indexed keywords

EID: 53849137655     PISSN: 01674870     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.joep.2007.07.007     Document Type: Article

References (25)

1. Ben-Arab M., Briys E., and Schlesinger H. Habit formation and the demand for insurance. The Journal of Risk and Insurance 63 (1996) 111-119
2. Benartzi S., and Thaler R. How much is investor autonomy worth?. The Journal of Finance 57 (2002) 1593-1616
3. Braun M., and Muermann A. The impact of regret on the demand for insurance. Journal of Risk and Insurance 71 (2004) 737-767
4. Burns, W. (2004). Circuit city stores, Inc. Harvard Business School, Case no. 9-191-086.
5. Chapman G., and Johnson E. Incorporating the irrelevant: Anchors in judgments of belief and value. In: Gilovich T., Griffin D., and Kahneman D. (Eds). Heuristics and biases: The psychology of intuitive judgment (2002), Cambridge University Press, New York
6. Choi J., Laibson D., Madrian B., and Metrick A. For better or for worse: Default effects and 401(k) savings behavior. In: Wise D. (Ed). Perspectives in the economics of aging (2004), University of Chicago Press, Chicago, IL
7. Cummins D., and Weisbart S. The impact of consumer services on independent insurance agency performance (1978), IMA Education and Research Foundation, Glenmont, NY
8. Epley N., and Gilovich T. The anchoring and adjustment heuristic: Why the adjustments are insufficient. Psychological Science 17 (2006) 311-318
9. Gneezy U., List J., and Wu G. The uncertainty effect: When a risky prospect is valued less than its worst outcome. Quarterly Journal of Economics 121 (2006) 1283-1309
10. Johnson E., Hershey J., Meszaros J., and Kunreuther H. Framing, probability distortion and insurance decisions. Journal of Risk and Uncertainty 7 (1993) 35-51
11. Kahneman D. Reference points, anchors, norms and mixed feelings. Organizational Behavior and Human Decision Processes 51 (1992) 296-312
12. Kahneman D., and Tversky A. Prospect theory: An analysis of decision under risk. Econometrica 47 (1979) 263-291
13. Kunreuther H., et al. Disaster insurance (1978), Wiley, New York
14. Mehra R., and Prescott E. The equity premium: A puzzle. Journal of Monetary Economics 15 (1985) 145-161
15. Mehra, R., & Prescott, E. (2003). The equity premium in retrospect. NBER Working Paper No. 9525.
16. Mossin J. Aspects of rational insurance purchasing. Journal of Political Economy 76 (1968) 553-568
17. Mullainathan S., and Thaler R. Behavioral economics. International Encyclopedia of Social Sciences (2001) 1094-1100
18. Pashigian B.P., Schkade L., and Menefee G. The selection of an optimal deductible for a given insurance policy. Journal of Business 39 (1966) 35-44
19. Schoemaker, P. (1976). Experimental studies on individual decision making under risk: An information processing approach. Doctoral dissertation, University of Pennsylvania.
20. Shapira Z., and Venezia I. Experimental tests of self selection and screening in insurance decisions. The Geneva Papers on Risk and Insurance Theory 24 (1999) 139-158
21. Slovic P., et al. Preference for insuring against probable small losses. Journal of Risk and Insurance 53 (1977) 237-245
22. Tversky A., and Kahneman D. Judgment under uncertainty: Heuristics and biases. Science 185 (1974) 1124-1131
23. US Department of Labor, Bureau of Labor Statistics (1999). Employee benefits survey: Technical note. Compensation and working conditions (pp. 53-58).
24. Viscusi W.K., and Zeckhauser R. National survey evidence on disasters and relief: Risk beliefs, self-interest, and compassion. Journal of Risk and Uncertainty 33 (2006) 13-36
25. Wakker P., Thaler R., and Tversky A. Probabilistic insurance. Journal of Risk and Uncertainty 15 (1997) 7-28