Risk reduction in compulsory disaster insurance: Experimental evidence on moral hazard and financial incentives

• Published in: Journal of behavioral and experimental economics Vol. 84; p. 101500
• Main Authors: Mol, Jantsje M., Botzen, W. J. Wouter, Blasch, Julia E.
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier Inc 01.02.2020; Elsevier Science Ltd
• Subjects: Behavioral insurance; Damage-reduction measures; Disaster insurance; Incentives; Insurance policies; Investments; Lab experiment; Loans; Markets; Monetary incentives; Moral hazard; Natural disasters; Probability; Risk; Risk assessment; Risk aversion; Risk factors; Strategies; Damage-reduction measures; Behavioral insurance; Natural disasters; Lab experiment; Moral hazard

•New investment game to investigate financial incentives for flood damage reduction in the lab.•Moral hazard is less of a problem in a natural disaster insurance market where probabilities are low.•Insurance premium discount can increase investments in damage reduction.•Risk aversion, perceived effi...