Insurable Losses, Pre-filled Claims Forms and Honesty in Reporting

McMaster University, Department of Economics Working Paper 2020-01

29 Pages Posted: 3 Feb 2020 Last revised: 6 Feb 2020

Date Written: January 29, 2020

Abstract

We design a series of laboratory experiments to investigate the effects of purchasing insurance and of pre-filled claim forms on dishonesty in loss reporting. In our experiment, participants report the outcome of privately rolling two dice where the numbers rolled map to a payoff distribution with the possibility of losses in earned income. Prior to this reporting task, participants bid for a limited number of insurance contracts which issue an indemnity payment equal to each insured individual’s reported loss. We find that dishonest reporting is significantly more prevalent among insured individuals relative to the uninsured, consistent with an 'entitlement bias’. Further we find that prefilling the reporting form with the most probable outcome only modestly constrains dishonest reporting among both insured and uninsured individuals. We explore reasons why pre-filled forms should be applied with caution.

Keywords: experimental economics, pre-filled forms, pre-populated fields, insurance, dishonesty, claim build-up

JEL Classification: C91, D82, G22

Suggested Citation

Morrison, William G. and Ruffle, Bradley J., Insurable Losses, Pre-filled Claims Forms and Honesty in Reporting (January 29, 2020). McMaster University, Department of Economics Working Paper 2020-01 . Available at SSRN: https://ssrn.com/abstract=3518766 or http://dx.doi.org/10.2139/ssrn.3518766

William G. Morrison

Wilfrid Laurier University ( email )

Bradley J. Ruffle (Contact Author)

McMaster University ( email )

1280 Main Street West
Hamilton, Ontario L8S 4M4
Canada

HOME PAGE: http://https://socialsciences.mcmaster.ca/people/ruffle-bradley

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