Insurance Purchase for Low-Probability Losses

摘要: It is widely accepted that individuals tend to underinsure against low-probability, high-loss events relative high-probability, low-loss events. This conventional wisdom based largely on field studies, as there very little experimental evidence. We reexamine this issue with an experiment accounts for possible confounds in prior insurance experiments. Our results are counter the evidence, we observe subjects buying more low-probability than higher-probability events, given a constant expected loss and load factor. suggest that, extent underinsurance catastrophic risk observed field, it can be attributed factors other probability of