Regret, rejoicing, and mixed insurance

Yoichiro Fujii; Mahito Okura; Yusuke Osaki

doi:10.1016/j.econmod.2016.05.026

Regret, rejoicing, and mixed insurance

Yoichiro Fujii, Mahito Okura, Yusuke Osaki^*

^*Corresponding author for this work

Research output: Contribution to journal › Article › peer-review

8 Citations (Scopus)

Abstract

This study examines how regret and rejoicing affect mixed insurance choice and demand. In contrast to expected utility theory, regret and rejoicing may explain why some individuals prefer to hold mixed insurance rather than term insurance. In this study, we derive the conditions under which an individual prefers to hold mixed insurance rather than term insurance. We also study demand for mixed insurance and specify the factors that influence the demand motive. The demand motive is determined by the risk effect and the rejoicing effect, when the rejoicing effect dominates the risk effect, under-insurance is optimal, and vice versa.

Original language	English
Pages (from-to)	126-132
Number of pages	7
Journal	Economic Modelling
Volume	58
DOIs	https://doi.org/10.1016/j.econmod.2016.05.026
Publication status	Published - 2016 Nov
Externally published	Yes

Keywords

Full insurance
Mixed insurance
Regret
Rejoicing

ASJC Scopus subject areas

Economics and Econometrics

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10.1016/j.econmod.2016.05.026

Cite this

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title = "Regret, rejoicing, and mixed insurance",

abstract = "This study examines how regret and rejoicing affect mixed insurance choice and demand. In contrast to expected utility theory, regret and rejoicing may explain why some individuals prefer to hold mixed insurance rather than term insurance. In this study, we derive the conditions under which an individual prefers to hold mixed insurance rather than term insurance. We also study demand for mixed insurance and specify the factors that influence the demand motive. The demand motive is determined by the risk effect and the rejoicing effect, when the rejoicing effect dominates the risk effect, under-insurance is optimal, and vice versa.",

keywords = "Full insurance, Mixed insurance, Regret, Rejoicing",

author = "Yoichiro Fujii and Mahito Okura and Yusuke Osaki",

note = "Funding Information: We are grateful to the three anonymous reviewers whose comments and suggestions helped us improve this paper greatly. We would like to thank the seminar participants at the 2014 Asia-Pacific Risk and Insurance meeting, the 2015 World Risk and Insurance Economic Congress, and the second East Asia RMI insurance workshop for their helpful comments on earlier versions of this paper. All remaining errors are, of course, ours. This study was partly supported by JSPS KAKENHI Grant numbers 24730362 and 26705004 and Kampo-Zaidan Grants. Publisher Copyright: {\textcopyright} 2016 Elsevier B.V.",

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doi = "10.1016/j.econmod.2016.05.026",

language = "English",

volume = "58",

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journal = "Economic Modelling",

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AU - Fujii, Yoichiro

AU - Okura, Mahito

AU - Osaki, Yusuke

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PY - 2016/11

Y1 - 2016/11

N2 - This study examines how regret and rejoicing affect mixed insurance choice and demand. In contrast to expected utility theory, regret and rejoicing may explain why some individuals prefer to hold mixed insurance rather than term insurance. In this study, we derive the conditions under which an individual prefers to hold mixed insurance rather than term insurance. We also study demand for mixed insurance and specify the factors that influence the demand motive. The demand motive is determined by the risk effect and the rejoicing effect, when the rejoicing effect dominates the risk effect, under-insurance is optimal, and vice versa.

AB - This study examines how regret and rejoicing affect mixed insurance choice and demand. In contrast to expected utility theory, regret and rejoicing may explain why some individuals prefer to hold mixed insurance rather than term insurance. In this study, we derive the conditions under which an individual prefers to hold mixed insurance rather than term insurance. We also study demand for mixed insurance and specify the factors that influence the demand motive. The demand motive is determined by the risk effect and the rejoicing effect, when the rejoicing effect dominates the risk effect, under-insurance is optimal, and vice versa.

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KW - Mixed insurance

KW - Regret

KW - Rejoicing

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JO - Economic Modelling

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Regret, rejoicing, and mixed insurance

Abstract

Keywords

ASJC Scopus subject areas

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