A Note on the Equality of Insurance and Gambling Motives

5 Pages Posted: 30 Mar 2017

See all articles by Markus Fels

Markus Fels

University of Dortmund - Department of Economics

Date Written: March 30, 2017

Abstract

In an attempt to explain both gambling and insurance behavior, economists have sought to reconcile gambling behavior with risk-averse preferences. In this note, I argue that there is no need for reconciliation. Both gambling and insurance behavior can be explained by the same motivation to concentrate resources into a subset of states in order to overcome affordability constraints.

Keywords: Affordability, Gambling, Insurance, Risk Preferences

JEL Classification: D81

Suggested Citation

Fels, Markus, A Note on the Equality of Insurance and Gambling Motives (March 30, 2017). Available at SSRN: https://ssrn.com/abstract=2943324 or http://dx.doi.org/10.2139/ssrn.2943324

Markus Fels (Contact Author)

University of Dortmund - Department of Economics ( email )

D-44221 Dortmund
Germany

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