Risk Aversion and Optimal Insurance Deductibles
Hanna, S. (1989). Risk aversion and optimal insurance deductibles. American Council on Consumer Interests Proceedings, 141-147.
12 Pages Posted: 27 Jun 2015
Date Written: April 24, 1989
Consumers face many decisions involving risk, yet some researchers claim that consumers cannot make rational decisions when risk is involved, even when full information is available. A simple normative analysis of decisions about insurance deductibles is presented. Implications for consumer education and public policy are discussed, including the need to teach consumers to choose insurance policies with higher deductibles. Possible computer expert systems to help consumers make decisions are also discussed.
Keywords: insurance, expected utility, personal finance
JEL Classification: D14, D11, D81, G22
Suggested Citation: Suggested Citation