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Loss Modification Incentives for Insurers under Expected Utility and Loss Aversion

Soetevent, Adriaan R.; Zhou, Liting - Tinbergen Instituut - 2014

Given the possibility to modify the probability of a loss, will a profit-maximizing insurer engage in loss prevention or is it in his interest to increase the loss probability? This paper investigates this question. First, we calculate the expected profit maximizing loss probability within an...

Persistent link: https://www.econbiz.de/10011256470

Dynamic Choice, Independence and Emotions

Hopfensitz, Astrid; Winden, Frans van - Tinbergen Instituut - 2006

variable is the particular decision stage at which a global risk is resolved: (i) before the investment decision; (ii) after … the investment decision, but before the resolution of the decision risk; (iii) after the resolution of the decision risk …. Dependent on the timing of the global risk different combinations of anticipated and experienced emotions influence decision …

Persistent link: https://www.econbiz.de/10011257656

Expected Utility and Catastrophic Risk

Ikefuji, Masako; Laeven, Roger; Magnus, Jan; Muris, Chris - Tinbergen Instituut - 2014

An expected utility based cost-benefit analysis is in general fragile to its distributional assumptions. We derive necessary and sufficient conditions on the utility function of the expected utility model to avoid this. The conditions ensure that expected (marginal) utility remains finite also...

Persistent link: https://www.econbiz.de/10011261938

Information at a Cost: A Lab Experiment

Robalo, Pedro; Sayag, Rei S. - Tinbergen Instituut - 2012

The supposed irrelevance of historical costs for rational decision making has been the subject of much interest in the … economic literature. In this paper we explore whether individual decision making under risk is affected by the cost of the …

Persistent link: https://www.econbiz.de/10011256591

Errors in Judicial Decisions

Sonnemans, Joep; Dijk, Frans van - Tinbergen Instituut - 2008

acquired. Roughly half of the participants do not base their decision on a subjective belief of the probability of guilt. The …

Persistent link: https://www.econbiz.de/10011255690

Risk and Savings: a Taxonomy

Gunning, Jan Willem - Tinbergen Instituut - 2008

Risk may induce precautionary saving but it can also reduce saving. The theoretical literature recognizes both possibilities, but favors a positive effect (both for developed and developing countries); the empirical literature is divided, reporting (small) positive effects for developed...

Persistent link: https://www.econbiz.de/10011256937

Optimal Search with Costly Recall

Janssen, Maarten C.W.; Parakhonyak, Alexei - Tinbergen Instituut - 2007

This paper builds a consumer search model where the cost of going back to stores already searched is explicitly taken into account. We show that the optimal search rule under costly recall is very different from the optimal search rule under perfect recall. Under costly recall, the optimal...

Persistent link: https://www.econbiz.de/10011257200

Price and Income Elasticities of Residential Water Demand: Why Empirical Estimates differ

Dalhuisen, Jasper M.; Florax, Raymond J.G.M.; Groot, … - Tinbergen Instituut - 2001

This paper presents a meta-analysis of variations in price and income elasticities of residential water demand.Information on the determinants of consumer demand is of pivotal importance for the efficiency and efficacy ofpublic and private policy-making. It is also crucial for effective water...

Persistent link: https://www.econbiz.de/10011257434

A Dynamic Utility Maximization Model for Product Category Consumption

Oest, Rutger van; Franses, Philip Hans; Paap, Richard - Tinbergen Instituut - 2002

It is conceivable that the "whether to buy" and "how much tobuy" decisions in the purchasing process of households areinfluenced by the inventory process. In this paper we thereforeput forward a model for consumption, where we rely on establishedeconomic theory. We incorporate this model in a...

Persistent link: https://www.econbiz.de/10011255825

Social Network Effects and Green Consumerism

Hauck, Dominic; Ansink, Erik; Bouma, Jetske; Soest, Daan van - Tinbergen Instituut - 2014

One of the drivers of green consumerism are social network externalities that are associated with buying 'green' because green consumerism is fashionable, or because of reputation effects. We analyze how the strength of this social network effect impacts green consumerism, environmental...

Persistent link: https://www.econbiz.de/10011255880