Risk Aversion, Risk Behavior and Demand for Insurance: A Survey

ICER Working Paper Series 11/2013

30 Pages Posted: 6 Dec 2013

Date Written: December 28, 2013

Abstract

Determinants of risk attitudes of individuals are of great interest in the growing area of behavioral economics that focuses on the individual attributes, psychological or otherwise, that shape common financial and investment practices. The purpose of this paper is to review the empirical literature on risk aversion (and risk behavior) with a particular focus on insurance demand or consumption. Empirical research on risk aversion may be categorized into two main areas, i.e. 1) the measurement and magnitude of risk aversion, 2) the empirical analysis of socio-demographic variables associated with risk aversion. The paper reviews this literature as well as empirical studies on the demand for insurance considering the use of variables associated with relative risk aversion.

Keywords: Risk aversion, Insurance demand, Education, Human development

JEL Classification: G22, D10, D81

Suggested Citation

Outreville, J. Francois, Risk Aversion, Risk Behavior and Demand for Insurance: A Survey (December 28, 2013). ICER Working Paper Series 11/2013, Available at SSRN: https://ssrn.com/abstract=2363877 or http://dx.doi.org/10.2139/ssrn.2363877

J. Francois Outreville (Contact Author)

HEC Montreal ( email )

3000, Chemin de la Côte-Sainte-Catherine
Montreal, Quebec H2X 2L3
Canada

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