Do emotions affect insurance demand?

Review of Behavioral Finance

Volumn 6, Issue 2, 2014, Pages 136-154

  Brighetti, Gianni ^a   Lucarelli, Caterina ^b   Marinelli, Nicoletta ^c  

^a UNIVERSITY OF BOLOGNA   (Italy)

^b UNIVERSITÀ POLITECNICA DELLE MARCHE   (Italy)

^c UNIVERSITY OF MACERATA   (Italy)

Author keywords

Ambiguity; Decision making; Emotion recognition; Impulsivity; Insurance behaviour; Iowa gambling task

Indexed keywords

EID: 84976578518     PISSN: 19405979     EISSN: 19405987     Source Type: Journal    
DOI: 10.1108/RBF-04-2014-0027     Document Type: Article

References (67)

1. Anderson, D.R. and Nevin, J.R. (1975), “Determinants of young marrieds’ life insurance purchasing behavior: an empirical investigation”, Journal of Risk and Insurance, Vol. 42 No. 3, pp. 375-387.
2. Arrow, K. (1963), “Uncertainty and the welfare economics of medical care”, The American Economic Review, Vol. 53 No. 5, pp. 141-149.
3. Baek, E. and DeVaney, S.A. (2005), “Human capital, bequest motives, risk, and the purchase of life insurance”, Journal of Personal Finance, Vol. 4 No. 2, pp. 62-84.
4. Bechara, A. and Damasio, A.R. (2005), “The somatic marker hypothesis: a neural theory of economic decision”, Games and Economic Behavior, Vol. 52 No. 2, pp. 336-372.
5. Bechara, A., Damasio, H. and Damasio, A.R. (2000), “Emotion, decision making and the orbitofrontal cortex”, Cerebral Cortex, Vol. 10 No. 3, pp. 295-307.
6. Bechara, A., Damasio, H., Tranel, D. and Damasio, A. (1997), “Deciding advantageously before knowing the advantageous strategy”, Science, Vol. 275 No. 5304, pp. 1293-1294.
7. Benhabib, J. and Bisin, A. (2005), “Modelling internal commitment mechanisms and self control: a neuroeconomics approach to consumption – savings”, Games and Economic Behavior, Vol. 52 No. 2, pp. 460-492.
8. Bernheim, B.D. (1991), “How strong are bequest motives? Evidence based on estimates of the demand for life insurance and annuities”, Journal of Political Economy, Vol. 99 No. 5, pp. 899-927.
9. Braun, M. and Muermann, A. (2004), “The impact of regret on the demand for insurance”, Journal of Risk and Insurance, Vol. 71 No. 4, pp. 737-767.
10. Brand, M., Recknor, E.C., Grabenhorst, F. and Bechara, A. (2007), “Decisions under ambiguity and decisions under risk: correlations with executive functions and comparisons of two different gambling tasks with implicit and explicit rules”, Journal of Clinical and Experimental Neuropsychology, Vol. 29 No. 1, pp. 86-99.
11. Burnett, J.J. and Palmer, B.A. (1984), “Examining life insurance ownership through demographic and psychographic characteristics”, Journal of Risk and Insurance, Vol. 51 No. 3, pp. 453-467.
12. Camerer, C.F. (2008), “The potential of neuroeconomics”, Economics and Philosophy, Vol. 24 No. 3, pp. 369-379.
13. Camerer, C.F., Loewestein, G. and Prelec, D. (2004), “Neuroeconomics: why economics needs brains”, Scandinavian Journal of Economics, Vol. 106 No. 3, pp. 555-579.
14. Chen, R., Wong, K.A. and Lee, H.C. (2001), “Age, period and cohort effects on life insurance purchases in the US”, Journal of Risk and Insurance, Vol. 68 No. 2, pp. 303-327.
15. Crone, E.A., Somsen, R.J.M., Van Beek, B. and Van Der Molen, M.W. (2004), “Heart rate and skin conductance analysis of antecedents and consequences of decision making”, Psychophysiology, Vol. 41 No. 4, pp. 531-540.
16. Damasio, A.R. (1994), Descartes' Error: Emotion, Reason and the Human Brain, Avon Books, New York, NY.
17. Diggle, P.J., Heagerty, P., Liang, K.Y. and Zeger, S.L. (2002), Analysis of Longitudinal Data, 2nd ed., Oxford University Press, Oxford.
18. Dunn, B.D., Dalgleish, T. and Lawrence, A.D. (2006), “The somatic marker hypothesis: a critical evaluation”, Neuroscience and Biobehavioral Reviews, Vol. 30 No. 2, pp. 239-271.
19. Duker, J.M. (1969), “Expenditures for life insurance among working-wife families”, Journal of Risk and Insurance, Vol. 36 No. 5, pp. 525-533.
20. Fitzgerald, J. (1987), “The effects of social security on life insurance demand by married couples”, Journal of Risk and Insurance, Vol. 54 No. 1, pp. 86-99.
21. Fortune, P. (1973), “A theory of optimal life insurance: development and tests”, The Journal of Finance, Vol. 27 No. 3, pp. 587-600.
22. Fossati, A., Di Ceglie, A., Acquarini, E. and Barratt, E.S. (2001), “Psychometric properties of an Italian version of the Barratt Impulsiveness Scale-11 (BIS-11) in nonclinical subjects”, Journal of Clinical Psychology, Vol. 57 No. 6, pp. 815-828.
23. Franken, I.H., Van Strien, J.W., Nijs, I. and Muris, P. (2008), “Impulsivity is associated with behavioral decision-making deficits”, Psychiatry Research, Vol. 158 No. 2, pp. 155-163.
24. Frees, E.W. and Sun, Y. (2010), “Household life insurance demand – a multivariate two-apart model”, North American Actuarial Journal, Vol. 14 No. 3, pp. 338-354.
25. Frees, E.W., Jin, X. and Lin, X. (2013), “Actuarial application of multivariate two-part regression models”, Annals of Actuarial Science, Vol. 7 No. 2, pp. 258-287.
26. Gandolfi, A.S. and Miners, L. (1996), “Gender-based differences in life insurance ownership”, Journal of Risk and Insurance, Vol. 63 No. 4, pp. 683-693.
27. Goldsmith, A. (1983), “Household life cycle protection: human capital versus life insurance”, Journal of Risk and Insurance, Vol. 50 No. 3, pp. 33-44.
28. Hau, A. (2000), “Liquidity, estate liquidation, charitable motives, and life insurance demand by retired singles”, Journal of Risk and Insurance, Vol. 67 No. 1, pp. 123-141.
29. He, Q., Xue, G., Chen, C., Lu, Z.L., Chen, C., Lei, X., Liu, Y., Li, J., Zhu, B., Moyzis, R.K., Dong, Q. and Bechara, A. (2012), “COMT Val158 Met polymorphism interacts with stressful life events and parental warmth to influence decision making”, Scientific Reports, Vol. 2 No. 677, doi:10.1038/srep00677.
30. Hogarth, R.M. and Kunreuther, H. (1989), “Risk, ambiguity, and insurance”, Journal of Risk and Uncertainty, Vol. 2 No. 1, pp. 5-35.
31. Howlett, E., Kees, J. and Kemp, E. (2008), “The role of self-regulation, future orientation and financial knowledge in long-term financial decisions”, Journal of Consumer Affairs, Vol. 42 No. 2 No. 1, pp. 223-242.
32. Hsee, C.K. and Kunreuther, H.C. (2000), “The affection effect in insurance decision”, Journal of Risk and Uncertainty, Vol. 20 No. 2, pp. 141-159.
33. Hsu, M. and Camerer, C.F. (2004), “Ambiguity-aversion in the Brain”, working paper, California Institute of Technology, Pasadena, CA.
34. Huang, R.J., Shih, P.-T. and Tzeng, L.Y. (2012), “Disappointment and the optimal insurance contract”, The Geneva Risk and Insurance Review, Vol. 37 No. 2, pp. 258-284.
35. Huysetruyt, G.W. and Rutstrom, E.E. (2010), “How do people value extended warranties? Evidence from two filed surveys”, Journal of Risk and Uncertainty, Vol. 40 No. 3, pp. 197-218.
36. Kahneman, D. and Tversky, A. (1979), “Prospect theory: an analysis of decision under risk”, Econometrica, Vol. 47 No. 2, pp. 263-291.
37. Knight, F.H. (1921), Risk, Uncertainty, and Profit, Hart, Schaffner and Marx Prize Essays, n. 31 Houghton Mifflin, Boston, MA and New York, NY.
38. Koeniger, W. (2004), “Labor income risk and car insurance in the UK”, The Geneva Papers on Risk and Insurance, Vol. 29 No. 1, pp. 55-74.
39. Koufopoulos, K. and Kozhan, R. (2010), “Optimal insurance under adverse selection and ambiguity aversion”, working paper, SSRN, University of Warwicki, available at: http://ssrn.com/abstract=1732268; or http://dx.doi.org/10.2139/ssrn.1732268 (accessed 27 September 2007).
40. Kunreuther, H.C., Pauly, M.V. and McMorrow, S. (2013), Insurance and Behavioral Economics. Improving Decisions in the Most Misunderstood Industry, Cambridge University Press, New York, NY.
41. Leonhardt, J.M., Keller, L.R. and Pechmann, C. (2011), “Avoiding the risk of responsibility by seeking uncertainty: responsibility aversion and preference for indirect agency when choosing for others”, Journal of Consumer Psychology, Vol. 21 No. 4, pp. 405-413.
42. Lewis, F.D. (1989), “Dependents and the demand for life insurance”, American Economic Review, Vol. 79 No. 3, pp. 452-467.
43. Li, D., Moshirian, F., Nguyen, P. and Wee, T. (2007), “The demand for life insurance in OECD countries”, Journal of Risk and Insurance, Vol. 74 No. 3, pp. 637-652.
44. Liebenberg, A.P., Carson, J.M. and Dumm, R.E. (2012), “A dynamic analysis of the demand for life insurance”, Journal of Risk and Insurance, Vol. 79 No. 3, pp. 619-644.
45. Lin, Y. and Grace, M.F. (2007), “Household life cycle protection: life insurance holding, financial vulnerability, and portfolio implications”, The Journal of Risk and Insurance, Vol. 74 No. 1, pp. 141-173.
46. Liu, H.H. and Colman, A.M. (2009), “Ambiguity aversion in the long run: repeated decisions under risk and uncertainty”, Journal of Economic Psychology, Vol. 30 No. 3, pp. 277-284.
47. Loewenstein, G.F. (2000), “Emotions in economic theory and economic behavior”, American Economic Review, Vol. 90 No. 2, pp. 426-432.
48. Loewenstein, G. and O'Donoghue, T. (2004), “Animal spirits: affective and deliberative influences on economie behavior”, working paper, Department of Social and Decision Sciences, Carnegie-Mellon University, Pittsburgh, PA.
49. Loewenstein, G.F., Weber, E.U., Hsee, C.K. and Welch, N. (2001), “Risk as feelings”, Psychological Bulletin, Vol. 127 No. 2, pp. 267-286.
50. Lucarelli, C. and Brighetti, G. (2010), Risk Tolerance in Financial Decision Making, Palgrave Macmillan, Basingstoke.
51. Martin, L.E. and Potts, G.F. (2009), “Impulsivity in decision-making: an event-related potential investigation”, Personality and Individual Differences, Vol. 46 No. 3, pp. 303-308.
52. Mossin, J. (1968), “Aspects of rational insurance purchasing”, Journal of Political Economy, Vol. 76 No. 4, pp. 553-568.
53. Muradoglu, G. and Harvey, N. (2012), “Behavioral finance: the role of psychological factors in financial decisions”, Review of Behavioral Finance, Vol. 4 No. 2, pp. 68-80.
54. Patton, J.M., Stanford, M.S. and Barratt, E.S. (1995), “Factor structure of the Barratt impulsiveness scale”, Journal of Clinical Psychology, Vol. 51 No. 6, pp. 768-774.
55. Ranyard, R. and McHugh, S. (2012), “Defusing the risk of borrowing: the psychology of payment protection insurance decision”, Journal of Economic Psychology, Vol. 33 No. 4, pp. 738-748.
56. Reimann, M. and Bechara, A. (2010), “The somatic marker framework as neurological theory of decision-making: review, conceptual comparisons, and future neuroeconomics research”, Journal of Economic Psychology, Vol. 31 No. 5, pp. 767-776.
57. Remund, D.L. (2010), “Financial literacy explicated: the case for a clearer definition in an increasingly complex economy”, Journal of Consumer Affairs, Special Issue: Financial Literacy, Vol. 44 No. 2, pp. 276-295.
58. Rick, S. (2011), “Losses, gains, and brains: neuroeconomics can help to answer open questions about loss aversion”, Journal of Consumer Psychology, Vol. 21 No. 4, pp. 453-463.
59. Rustichini, A. (2005), “Emotion and reason in making decisions”, Science, Vol. 310 No. 5754, pp. 1624-1625.
60. Schunk, D. and Betsch, C. (2006), “Explaining heterogeneity in utility functions by individual differences in decision modes”, Journal of Economic Psychology, Vol. 27 No. 3, pp. 386-401.
61. Schwarcz, D. (2010), “Insurance demand anomalies and regulation”, Journal of Consumer Affairs, Vol. 44 No. 3, pp. 557-577.
62. Showers, V.E. and Shotick, J.A. (1994), “The effects of household characteristics on demand for insurance: a Tobit analysis”, Journal of Risk and Insurance, Vol. 61 No. 3, pp. 492-502.
63. Smith, V.L. (1968), “Optimal insurance coverage”, Journal of Political Economy, Vol. 76 No. 1, pp. 68-77.
64. Suhr, J.A. and Buelow, M.T. (2009), “Construct validity of the Iowa Gambling Task”, Neuropsychology Review, Vol. 19 No. 1, pp. 102-114.
65. Von Neumann, J. and Morgenstern, O. (1944), Theory of Games and Economic Behaviour, Princeton University Press, Princeton, NJ.
66. Zietz, E.N. (2003), “An examination of the demand for life insurance”, Risk Management and Insurance Review, Vol. 6 No. 2, pp. 159-191.
67. Loewenstein, G.F. (1996), “Out of control: visceral influences on behavior”, Organizational Behavior and Human Decision Processes, Vol. 65 No. 3, pp. 272-292.