At the core of the decision to invest in prevention are individuals who face immediate real costs against future and uncertain benefits.In this paper,we elicit subjects’willingness to pay to reduce future risk.In our...At the core of the decision to invest in prevention are individuals who face immediate real costs against future and uncertain benefits.In this paper,we elicit subjects’willingness to pay to reduce future risk.In our experiments,subjects are given a cash endowment and a risky lottery.They report their willingness to pay to exchange the risky lottery for a safe one.Subjects play the lottery either immediately,eight weeks later,or 25 weeks later.Thus,both the lottery and the future are sources of uncertainty in our experiments.In two additional treatments,we control for future uncertainty with a continuation probability(a stopping rule),constant and independent across periods,that simulates the chances of not being able to return to play the lottery after 8 and 25 periods.We find evidence for a present bias in both the time-delay sessions and the continuation probability sessions,suggesting that this bias robustly persists in environments including both risk and future uncertainty.Therefore,eliciting prevention behaviour is a major challenge.展开更多
Based on experimental data,this paper confirms,in a controlled environment,converging theoretical and empirical results that,when individuals insure,they choose to insure themselves with a full cover.This insurance be...Based on experimental data,this paper confirms,in a controlled environment,converging theoretical and empirical results that,when individuals insure,they choose to insure themselves with a full cover.This insurance behaviour creates an opportunity for the public authority to drive people to enter the insurance market where they would buy full insurance.This paper also sheds light on the risks of an opportunistic insurers’behaviour.This heuristic challenges the efficiency of separating contracts designed to address adverse selection issues.Indeed,a strong preference for full contracts may encourage low-risk individuals to turn to(full)contracts designed for high-risk individuals,yielding advantageous selection opportunities for insurers.However,if this heuristic strengthens the high-risks’reluctance for partial insurance,it may increase the efficiency of the separating contracts,and the lowrisk individuals suffer less from adverse selection.展开更多
文摘At the core of the decision to invest in prevention are individuals who face immediate real costs against future and uncertain benefits.In this paper,we elicit subjects’willingness to pay to reduce future risk.In our experiments,subjects are given a cash endowment and a risky lottery.They report their willingness to pay to exchange the risky lottery for a safe one.Subjects play the lottery either immediately,eight weeks later,or 25 weeks later.Thus,both the lottery and the future are sources of uncertainty in our experiments.In two additional treatments,we control for future uncertainty with a continuation probability(a stopping rule),constant and independent across periods,that simulates the chances of not being able to return to play the lottery after 8 and 25 periods.We find evidence for a present bias in both the time-delay sessions and the continuation probability sessions,suggesting that this bias robustly persists in environments including both risk and future uncertainty.Therefore,eliciting prevention behaviour is a major challenge.
基金This work is partially supported by a grant overseen by the French National Research Agency(ANR)in the Investissement d’Avenir programme,through the iCODE Institute project funded by the IDEX Paris-Saclay[Grant No.ANR-11-IDEX-0003-02]。
文摘Based on experimental data,this paper confirms,in a controlled environment,converging theoretical and empirical results that,when individuals insure,they choose to insure themselves with a full cover.This insurance behaviour creates an opportunity for the public authority to drive people to enter the insurance market where they would buy full insurance.This paper also sheds light on the risks of an opportunistic insurers’behaviour.This heuristic challenges the efficiency of separating contracts designed to address adverse selection issues.Indeed,a strong preference for full contracts may encourage low-risk individuals to turn to(full)contracts designed for high-risk individuals,yielding advantageous selection opportunities for insurers.However,if this heuristic strengthens the high-risks’reluctance for partial insurance,it may increase the efficiency of the separating contracts,and the lowrisk individuals suffer less from adverse selection.
