publication . Preprint . 2004

Affective Decision Making in Insurance Markets

Anat Bracha;
Open Access
  • Published: 01 Jan 2004
This paper suggests incorporating affective considerations into decision making theory and insurance decision in particular. I describe a decision maker with two internal accounts - the rational account and the mental account. The rational account decides on insurance to maximize expected (perceived) utility, while the mental account chooses risk perceptions which then affect the perceived expected utility. The two accounts interact to reach a decision which is composed of both risk perception and insurance level. The model is based on psychology research and shows interesting results for the insurance markets. Also, this framework helps to distinguish between r...
free text keywords: Insurance, risk perception, motivated reasoning and dual-processes

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