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Risk Aversion, Loss Aversion, and the Demand for Insurance

Abstract : In this paper we analyze insurance demand when the utility function depends both upon final wealth and the level of losses or gains relative to a reference point. Besides some comparative statics results, we discuss the links with first-order risk aversion, with the Omega measure, and with a tendency to over-insure modest risks that has been been extensively documented in real insurance markets.
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Submitted on : Tuesday, November 3, 2020 - 2:34:20 PM
Last modification on : Tuesday, December 6, 2022 - 12:42:13 PM

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Louis Eeckhoudt, Anna Fiori, Emanuela Rosazza Gianin. Risk Aversion, Loss Aversion, and the Demand for Insurance. Risks, 2018, 6 (2), pp.60. ⟨10.3390/risks6020060⟩. ⟨hal-02987006⟩



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