Behavioral Economics and the Demand for Insurance
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Authors
Dietz, Haley E.
Issue Date
2020-10
Type
Article
Language
en_US
Keywords
Economics , Insurance
Alternative Title
Abstract
While neoclassical economic models have provided significant insight into policy and economic
behavior, these models fail to take into account actual human behavior outside of what is
defined as rational. These anomalies in human behavior from what neoclassical models predict
creates problems when looking to implement effective policies in practice. Through examining
one such application of this problem in the demand for insurance, this paper examines the work
of several behavioral economists in an attempt to understand where current consumer behavior
strays from what neoclassical economists predict. This paper pinpoints the resulting difference
in consumer behavior and seeks to understand its specific causes. Following a discussion of the
literature, this paper argues that there remains a need to investigate the root causes of this
anomalous behavior in order to effectively influence insurance policy to ensure consumers are
purchasing both the right type and amount of insurance to best fit their needs.
Description
Peer-Reviewed Journal Article. 16 pages
Citation
Publisher
Drake Management Review