Decision theories and probabilistic insurance: an experimental test

  1. Tomás Lucas, Josefa
  2. Herrero Blanco, Carmen
Revista:
Spanish economic review

ISSN: 1435-5469

Año de publicación: 2006

Volumen: 8

Número: 1

Páginas: 35-52

Tipo: Artículo

DOI: 10.1007/S10108-005-0102-1 DIALNET GOOGLE SCHOLAR

Otras publicaciones en: Spanish economic review

Resumen

This paper reports the results of an experiment in which probabilistic insurance, as proposed by Kahneman and Tversky (1979), is compared both with full insurance and no insurance. The experimental results conform to the intuitive prediction that risk-averse agents who are indifferent between full insurance and no insurance, will prefer full insurance to probabilistic insurance and probabilistic insurance to no insurance. The first conclusion is incompatible with the predictions of expected utility theory, and the second with Kahneman and Tversky's prospect theory. We also show that Loomes and Sudgen's regret theory can easily accommodate these intuitive results.

Referencias bibliográficas

  • Balistreri E, McClelland G, Poe G, Schulze W (2001) Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values. Environmental and Resource Economics 18: 275-292
  • Battalio R, Kagel J, Jiranyakul K (1990) Testing Between Alternative Models of Choice under Uncertainty: Some Initial Results. Journal of Risk and Uncertainty 3: 25-50
  • Camerer C, Hogarth R (1999) The Effects of Financial Incentives in Experiments: A Review and Labor-Capital-Production-Framework. Journal of Risk and Uncertainty 19: 7-42
  • Cummings R, Elliot S, Harrison G, Murphy J (1997) Are Hypothetical Referenda Incentive Compatible? Journal of Political Economy 105: 609-621
  • Davis D, Holt C (1993) Experimental Economics. University Press, Princeton
  • Holt C, Laury S (2002) Risk Aversion and Incentive Effects. American Economic Review 92: 1644-1655
  • Kahnemann D, Tversky A (1979) Prospect Theory: an Analysis of Decision under Risk. Econometrica 47: 263-291
  • Laury S, Holt C (2000) Further Reflections on Prospect Theory. Discussion Paper, University of Virginia
  • Loomes G (1988) When Actions Speak Louder than Prospects. American Economic Review 78: 463-470
  • Loomes G (1989) Testing Regret Theory. Mimeo, EXEC, University of York
  • Loomes G, Starmer C, Sugden R (1991) Observing Violations of Transitivity by Experimental Methods. Econometrica 59: 425-439
  • Loomes G, Sugden R (1982) Regret Theory: An Alternative Theory of Rational Choice under Uncertainty. The Economic Journal 92: 805-824
  • Loomes G, Sugden R (1987) Some Implications of a More General Form of Regret Theory. Journal of Economic Theory 41: 270-287
  • Sirvent R, Tomas J (1995) Expanded Version of Regret Theory: Experimental Test. Working Paper, WP-AD 95-16, Institute Valenciano de Investigaciones Económicas
  • Smith V, Walker J (1993) Monetary Rewards and Decision Cost in Experimental Economics. Economic Inquiry XXXI: 245-261
  • Starmer C, Sugden R (1991) Does the Random-Lottery Incentive System Elicit True Preferences? An Experimental Investigation. American Economic Review 81: 971-978
  • Wakker P, Thaler R, Tversky A (1997) Probabilistic Insurance. Journal of Risk and Uncertainty 15: 7-28
Fuente de los datos: Dialnet