We experimentally analyze consoumers' reaction to insurance default risk. Consistent with eralier studies, we find that insurance with default risk is extremely unattractive to most individuals. A considerable fraction of consumers completely refuse to accept any default risk; others ask for...

There is considerable empirical and experimental evidence that insurance demand issignificantly influenced by an insurance firm’s solvency level. For example, Sommer (1996)and Cummins and Danzon (1997) empirically show that a firm’s financial distress isaccompanied by a decrease in insurance...

We use a sample of 18 countries to study what variables have a significant impact on an individual’s decision to start a new business and classification and regression trees for an accurate interpretation of the data. Our results support existing literature suggesting the existence of strong...

We analyze the effects of prior gain and loss experiences on individuals’ behavior in twocoordination games: battle of the sexes and simultaneous market entry. We proposesubjectively transformed games that integrate elements of prospect theory, aggregation ofprior and subsequent payoffs, and...

We investigate the strategic decision behavior of female entrepreneurs in a realistic marketentry experiment where individuals started with gains or losses experienced prior to the game.We compare the entry behavior of female entrepreneurs to the entry behavior of maleentrepreneurs and to the...

Disinvestment, in the sense of project termination and liquidation of assets including thecession of a venture, is an important realm of entrepreneurial decision-making. This studypresents the results of an experimental investigation modeling the choice to disinvest as adynamic problem of...

We analyze the impact of an individual's tendency to worry on willingness to pay (WTP) for a protective measure. We report on the results of a controlled experiment with real objects at stake. Worry was measured with the Worry Domains Questionnaire, an instrument determining an individual's...

We formally represent the effects of prior gains and losses in a simple dynamic preference calculus based on prospect theory's value function and thoughts adapted from aspiration level theories. We investigate our predictions in questionnaire experiments. Since we document a strong effect of...

This article investigates whether decision makers intuitively optimize close to the normative prediction in entrepreneurial decision situations where their time must be allocated between a wage job and a newly formed venture. We offer an analytical model based on maximizing expected utility, and...

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...