On the profitability of collusion in location games
On the basis of a real high stakes insurance experiment with small probabilities of losses, we demonstrate that concern is a more important driver of WTP for insurance than subjective probability estimates when there is ambiguity surrounding the estimate. Concern is still important when probabilities are exactly given. It also helps explaining the low probability insurance puzzle well known from the literature, where a part of individuals pays too much and a part nothing for coverage, a result we are able to replicate. In our experiment, belonging to either the group of threshold persons or to those that pay far too much, is not related to probability judgments but to the degree an individual is concerned in our decision situation.
Year of publication: |
2000
|
---|---|
Authors: | Huck, Steffen ; Knoblauch, Vicki ; Müller, Wieland |
Institutions: | Sonderforschungsbereich 373, Quantifikation und Simulation ökonomischer Prozesse, Wirtschaftswissenschaftliche Fakultät |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Why the rich are nastier than the poor: A note on optimal punishment
Huck, Steffen, (1998)
-
The East End, the West End, and King's Cross: On clustering in the four-player hotelling game
Huck, Steffen, (2000)
-
Strategic delegation in experimental markets
Huck, Steffen, (2000)
- More ...