Self insurance and insurance demand under self-deception

Ran Ranjan

    Research output: Contribution to journalArticle

    Abstract

    A dynamic model of self insurance and market insurance demand against uncertain natural hazards is developed where agents incur emotional costs when the true information about potential future catastrophes becomes known. Agents purposefully ignore the incoming signals about future hazards in order to avoid finding out the true information. Faced with the emotional costs associated with true information revelation, self-deception through true information avoidance effort may be the optimal strategy to maximize current and future utility. Government interventions for complementing private risk mitigation and adaptation through incentives and regulations may have a varying influence on such agents exhibiting emotional costs.
    Original languageEnglish
    Pages (from-to)Article 5-1-Article 5-25
    Number of pages25
    JournalAsia-Pacific journal of risk and insurance
    Volume5
    Issue number2
    DOIs
    Publication statusPublished - 2011

    Keywords

    • flooding insurance
    • coastal hazards
    • dynamic endogenous risks
    • insurance
    • self-protection
    • amenity migration
    • psychological expected utility
    • self-deception
    • catastrophe

    Fingerprint Dive into the research topics of 'Self insurance and insurance demand under self-deception'. Together they form a unique fingerprint.

    Cite this