In this article, we derive optimal insurance policies for policyholders with regret theoretic preferences. Our results show that regret aversion decreases the demand for insurance when insurance is fairly priced, whereas for high insurance loadings the effect of regret aversion on insurance demand is ambiguous. Furthermore, we show that regret aversion can explain positive deductibles for fairly priced insurance in markets with symmetric information.
Zeitraum
5 Aug. 2012 → 8 Aug. 2012
Ereignistitel
Annual Meeting of the American Risk and Insurance Association