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The impact of regret on the demand for insurance (2004)
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Venue: | Journal of Risk and Uncertainty |
Citations: | 31 - 2 self |
Citations
6309 | Prospect theory: an analysis of decision under risk
- Kahneman, Tversky
- 1979
(Show Context)
Citation Context ...d in both the laboratory and in the field. Loomes and Sugden (1982) show how Kahneman and Tversky’s examples of preference inconsistencies and intransitivities that were explained by Prospect Theory (=-=Kahneman and Tversky 1979-=-) can also be explained by Regret Theory. Bell (1982) illustrates how Regret Theory can help explain simultaneous preferences for insurance and gambling. Experiments to test the specific impact of reg... |
2529 | The Foundation of Statistics. - Savage - 1954 |
1369 | Moral Hazard and Observability."
- Holmström
- 1979
(Show Context)
Citation Context ...vidual who is not regret-averse would buy full insurance (α∗ =1) if the contract were fairly priced. Partial insurance may be indicated either by a positive loading factor (λ >0), or by moral hazard (=-=Holmstrom 1979-=-) or adverse selection (Rothschild and Stiglitz 1976). We now establish another reason why individuals would demand partial insurance in the absence of such information asymmetries. Proposition 2 If a... |
1098 | Equilibrium in Competitive Insurance Markets : An Essay on the Economics of Imperfect Information,
- Rothschild, Stiglitz
- 1976
(Show Context)
Citation Context ...buy full insurance (α∗ =1) if the contract were fairly priced. Partial insurance may be indicated either by a positive loading factor (λ >0), or by moral hazard (Holmstrom 1979) or adverse selection (=-=Rothschild and Stiglitz 1976-=-). We now establish another reason why individuals would demand partial insurance in the absence of such information asymmetries. Proposition 2 If a coinsurance contract is offered, a regret-averse in... |
554 | Regret theory: an alternative theory of rational choice under uncertainty - Loomes, Sugden - 1982 |
460 | Regret in decision making under uncertainty. - Bell - 1982 |
310 |
Thinking and deciding
- Baron
- 1994
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Citation Context ...ent with the idea of anticipating ex-post suboptimal outcomes. Of course, even if the experimental evidence on regret is inconclusive, it does not mean that regret is not a factor in decision-making (=-=Baron 2000-=-, p. 265). As we develop our model of regret-induced decision making, we will show below that regret can perturb optimal decisions in one direction in some situations, but in other directions for othe... |
229 | The dual theory of choice under risk - Yaari - 1987 |
138 | Framing probability distortions and insurance decisions - Johnson, Hershey, et al. - 1993 |
96 |
Anticipated regret, expected feedback and behavioral decision-making.
- Zeelenberg
- 1999
(Show Context)
Citation Context ...highest level of regret that could possibly occur for each decision alternative (among all possible outcomes), and then choose the decision alternative with the lowest of these maximum regret levels (=-=Zeelenberg 1999-=-). The minimax regret rule is useful because it places an upper bound on the regret that one would experience. However, it does not take into account the probabilities of any of the states of the worl... |
78 | Testing for juxtaposition and event-splitting effects. - Starmer, Sugden - 1993 |
78 | Convexity in the Theory of Choice under - Yaari - 1965 |
76 | Outcome Bias in decision evaluation,” - Baron, Hershey - 1988 |
52 | Risk Premiums for Decision Regret,” - Bell - 1983 |
49 |
Avoiding regret in decisions with feedback: a negotiation example. Organizational Behavior and Human Decision Processes,
- Larrick, Boles
- 1995
(Show Context)
Citation Context ...oregone alternative. Thus, Regret Theory assumes not only that decision-makers experience regret, but also that the anticipation of experiencing regret is factored into the decision-making processes (=-=Larrick and Boles 1995-=-). Unlike the formulation of Regret Theory of equation (2), which considers two outcomes of a lottery, we are concerned with preferences among actions. It is straightforward to convert the modified ut... |
47 | Preference for insuring against probable small losses-insurance implications, - Slovic, Fischhoff - 1977 |
43 | Testing for regret and disappointment in choice under uncertainty. - Loomes, Sugden - 1987 |
27 | The Selection of an Optimal Deductible for a Given Insurance Policy,” - Pashigian, Schkade, et al. - 1966 |
23 | Optimal insurance without expected utility: The dual theory and the linearity of insurance contracts,Journal of Risk and Uncertainty - Doherty, Eeckhoudt - 1995 |
21 |
The Optimal Level of Deductibility in Insurance Contracts
- Schlesinger
- 1981
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Citation Context ...e models that a risk-averse individual will purchase full insurance when the insurance contract is fairly priced and less than full insurance with a positive proportional loading factor (Mossin 1968; =-=Schlesinger 1981-=-, 2000). This result applies to insurance policies of both a coinsurance structure (where indemnity is a proportion of the loss) and a deductible structure (where indemnity is a payoff for losses abov... |
21 |
Further evidence of the impact of regret and disappointment in choice under uncertainty.
- Loomes
- 1988
(Show Context)
Citation Context ...ht have been had another state of the world occurred” (p. 529). The distinction between disappointment and regret can be examined in terms of the reference point against which the decisions are made (=-=Loomes 1988-=-). When a decision-maker minimizes regret, the reference point for each action is the outcome that is accrued in the same state of the world from the other action. If a decision-maker minimizes disapp... |
20 | Are Preferences Monotonic? Testing Some Predictions of Regret Theory." - Loomes, Starmer, et al. - 1992 |
19 | Non-expected utility and the robustness of the classical insurance paradigm - Machina - 1995 |
18 | The theory of insurance demand - Schlesinger - 2000 |
17 | Regret theory with general choice sets, - Quiggin - 1994 |
13 | An axiomatic foundation of regret. - Sugden - 1993 |
10 |
Insurance as a cornerstone for public-private sector partnerships. Natural Hazards Review
- Kunreuther
- 2000
(Show Context)
Citation Context ...uctible of $100 on automobile insurance policies was ultimately rescinded after publicoutcry,eventhoughsuchlegislationcouldhavesaved 17consumers millions of dollars each year (Cummins, et. al, 1978; =-=Kunreuther 2000-=-) . More recently, Grace et al. (2003) summarized preferences for low deductibles for homeowners’ insurance in New York and Florida for catastrophic losses. Preferences for low deductibles have also b... |
8 | Omission Bias in Vaccination Decisions: Where’s the “Omission”? Where’s The “Bias - Connolly, Reb - 2003 |
8 |
Consumer attitudes toward auto and homeowners insurance
- Cummins, McGill, et al.
- 1974
(Show Context)
Citation Context ...lace a minimum deductible of $100 on automobile insurance policies was ultimately rescinded after public outcry, even though such legislation could have saved consumers millions of dollars each year (=-=Cummins et al., 1978-=-; Kunreuther, 2000). More recently, Grace et al. (2003) summarized preferences for low deductibles for homeowners’ insurance in New York and Florida for catastrophic losses. Preferences for low deduct... |
8 |
Thinking and deciding. 3rd edition
- Baron
(Show Context)
Citation Context ...ent with the idea of anticipating ex post suboptimal outcomes. Of course, even if the experimental evidence on regret is inconclusive, it does not mean that regret is not a factor in decision making (=-=Baron, 2000-=-, p. 265). As we develop our model of regret-induced decision making, we will show below that regret can perturb optimal decisions in one direction in some situations, but in other directions for othe... |
4 |
Aspects of rational insurance pricing
- Mossin
- 1968
(Show Context)
Citation Context ...hed from these models that a risk-averse individual will purchase full insurance when the insurance contract is fairly priced and less than full insurance with a positive proportional loading factor (=-=Mossin 1968-=-; Schlesinger 1981, 2000). This result applies to insurance policies of both a coinsurance structure (where indemnity is a proportion of the loss) and a deductible structure (where indemnity is a payo... |
4 | The Foundations of Statistics. Wiley Publications in Statistics - Savage - 1954 |
3 | On the Theory of Rational Insurance Purchasing: A Note - Briys, Louberge - 1985 |
3 | Rational Insurance Purchasing - Razin - 1976 |
2 | Further evidence of the impact of regret and disappointment in choice under uncertainty - unknown authors - 1988 |
2 | 2003, Omission Bias in Vaccination Decisions - Connolly, Reb |
2 | Are preferences monotonic—testing some predictions of regret theory. - Loomes, Starmer, et al. - 1992 |
1 | Rational insurance purchasing - unknown authors - 1976 |