Publication
Jan 2012
This paper provides a detailed analysis of insurance demand under prospect theory (PT). In particular, the author argues that it is questionable whether initial wealth is the right choice of the reference point for insurance problems. He proposes two alternative reference points which both imply that the rate of insurance take-up increases with the probability of a loss.
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English (PDF, 8 pages, 810 KB) |
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Author | Ulrich Schmidt |
Series | Kiel Institute Working Papers |
Issue | 1750 |
Publisher | Kiel Institute for the World Economy |
Copyright | © 2012 Kiel Institute for the World Economy |