Abstract
In earlier work by Slovic et al. (Journal of Risk and Insurance, 1977 pp. 237–258) studying insurance decisions under laboratory conditions, subjects showed a clear and repeated preference to purchase insurance against high-probability, low-loss events rather than the opposite. This result comes as a surprise as the primary objects for insurance are most commonly risks with some large loss potential but occurring only rarely. In subsequent studies, the reported effect was somewhat reduced but a convincing explanation for this odd behavior was not offered. The present study analyses preceding work with respect to its research design and presents an alternative problem solution.
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Theil, M. To Insure or not to Insure? Considerations on Irrational Strategies to Take Out Insurance. Geneva Pap Risk Insur Issues Pract 25, 288–295 (2000). https://doi.org/10.1111/1468-0440.00066
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DOI: https://doi.org/10.1111/1468-0440.00066