This study develops an experimental analysis addressing the premium sensitivity of the demand for insurance accounting for risk attitudes, including risk-loving. Our contribution disentangles the conditional demand (the non-null demand for insurance) from the propensity to buy insurance. Our research shows that the contraction of the global demand for insurance induced by the raise in unit prices and fixed cost is primarily due to policyholders exiting the insurance market rather than reducing their levels of coverage. However, contrary to the theoretical predictions, an increase in the fixed cost has effects only on the risk lovers’ behavior. The stability of the conditional demand is robust to changes in insurance contracts and individuals’risk attitude. These results suggest that the decision about insurance may boil down to an “all or nothing” choice.

In line with the theory, risk lovers express a lower global demand for insurance than risk-averse subjects and are the first to leave the insurance market when the premium (unit price or fixed cost) is prohibitive.

Implications regarding public and economic policies are discussed. As a by-product, our experimental design enables to test and reject the assumption of inferiority of the risk averters’ demand for insurance.

Voir le document

Dernières publications

2017s-12 CS
Policy relevance of applied economist: Examining sensitivity and inferences
Maurice Doyon, Stéphane Bergeron et Lota Dabio Tamini
Voir le document

2017RP-03 RP
La surqualification professionnelle chez les diplômés des collèges et des universités : État de la situation au Québec
Brahim Boudarbat et Claude Montmarquette
Voir le document

2017s-11 CS
The social cost of contestable benefits
Arye Hillman et Ngo Van Long
Voir le document

2017s-09 CS
Fiscal Surprises at the FOMC
Dean Croushore et Simon van Norden
Voir le document

Centre interuniversitaire de recherche en analyse des organisations
1130 rue Sherbrooke Ouest, suite 1400
Montréal, Québec (Canada) H3A 2M8
(514) 985-4000
(514) 985-4039

© 2017 CIRANO. Tous droits réservés.

Partenaire de :