We developed and experimentally tested an extended version of Mossin’s traditional theoretical demand for insurance for both risk averters and risk lovers. Both the theoretical model and the experimental data show that the demand for insurance is tantamount to an all or nothing choice. This bimodal distribution of decisions requires an appropriate statistical analysis to confront the data with the model. Thus, this article presents two complementary statistical tests. The first one uses a graphical representation of the experimental results along with a χ2 test to assess the general goodness of fit of the theoretical model with the data. The second, an econometric model, complements the analysis by assessing the effects of the contractual parameters and risk attitudes on individual demand for insurance. The econometric results show primarily that an increase in the unit price consists in an exit of the insurance market rather than in a contraction of the coverage: as the unit price increases, risk lovers, followed by risk averters, significantly withdraw from the insurance market as they forgo the full insurance contract. However, from the χ2 test, regardless of their risk attitude, the participants exhibit insufficient demand elasticity to price. Finally, the lack of effect of the fixed cost on risk averters’ demand for partial insurance refutes the inferiority assumption of the demand for insurance.

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Dernières publications

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