Near-losses in insurance markets: An experiment

Several studies report changes in risk taking subsequent to experiencing near-loss events. We disentangle strategic and non-strategic reactions to such near-losses experimentally. We observe that near-losses affect the supply and demand for insurance under strategic uncertainty but not individual ev...

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Bibliographic Details
Published inEconomics letters Vol. 186; p. 108781
Main Authors Heinrich, Timo, Seifert, Matthias, Then, Franziska
Format Journal Article
LanguageEnglish
Published Amsterdam Elsevier B.V 01.01.2020
Elsevier Science Ltd
Subjects
Insurance
Insurance policies
Markets
Near-losses
Near-miss events
Risk taking
Strategic uncertainty
Supply & demand
Uncertainty
Near-losses
Strategic uncertainty
G22
Insurance
Markets
C91
Near-miss events
D81
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Summary:Several studies report changes in risk taking subsequent to experiencing near-loss events. We disentangle strategic and non-strategic reactions to such near-losses experimentally. We observe that near-losses affect the supply and demand for insurance under strategic uncertainty but not individual evaluations. •We experimentally study the effect of near-loss events on risk taking.•We observe an increase in bids and asks following near-losses in a call market.•Individual evaluations of insurances are not significantly affected by near-losses.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2019.108781