Date of this Version
Research Handbook on the Economics of Insurance Law
It is easy for a consumer to make mistakes in insurance markets, especially when deciding whether to purchase insurance against low-probability, high-consequence (LP-HC) events. They have a hard time collecting and processing information to determine the likelihood and consequences of these risks which (by definition) they have had limited or no experience. Hence, people often rely on feelings and intuition rather than careful thought when it comes time to decide what coverage to purchase.
This is a draft chapter. The final version is available in Research Handbook on the Economics of Insurance Law edited by Daniel Schwarcz and Peter Siegelman, published in 2015, Edward Elgar Publishing Ltd: http://dx.doi.org/10.4337/9781782547143.00007.
The material cannot be used for any other purpose without further permission of the publisher, and is for private use only.
Kunreuther, H. & Pauly, M. (2015). Behavioral Economics and Insurance: Principles and Solutions. In Schwarcz, D. & Siegelman, P. (Eds.), Research Handbook on the Economics of Insurance Law, 15-35. Edward Elgar Publishing Ltd.
Date Posted: 26 June 2018