A Note on the Equality of Insurance and Gambling Motives
5 Pages Posted: 30 Mar 2017
Date Written: March 30, 2017
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: Suggested Citation