Journal of Risk and Uncertainty

, Volume 7, Issue 1, pp 35–51 | Cite as

Framing, probability distortions, and insurance decisions

  • Eric J. Johnson
  • John Hershey
  • Jacqueline Meszaros
  • Howard Kunreuther


A series of studies examines whether certain biases in probability assessments and perceptions of loss, previously found in experimental studies, affect consumers' decisions about insurance. Framing manipulations lead the consumers studied here to make hypothetical insurance-purchase choices that violate basic laws of probability and value. Subjects exhibit distortions in their perception of risk and framing effects in evaluating premiums and benefits. Illustrations from insurance markets suggest that the same effects occur when consumers make actual insurance purchases.

Key words

insurance decisions biases probability distortions framing 


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Copyright information

© Kluwer Academic Publishers 1993

Authors and Affiliations

  • Eric J. Johnson
    • 1
  • John Hershey
    • 2
  • Jacqueline Meszaros
    • 3
  • Howard Kunreuther
    • 4
  1. 1.The Wharton School, Marketing DepartmentUniversity of PennsylvaniaPhiladelphia
  2. 2.The Wharton School, Department of Operations and Information ManagementUniversity of PennsylvaniaPhiladelphia
  3. 3.School of Business and Management, Department of General and Strategic ManagementTemple UniversityPhiladelphia
  4. 4.The Wharton School, Department of Operations and Information ManagementUniversity of PennsylvaniaPhiladelphia

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