How perceived skills and risk attitude influence decision making regarding insurable losses – results of computer-based incentivised experiment

Abstract

The aim of this paper is to check whether some characteristics of a decision maker influence decision on buying insurance policy and do insured behave in a different way than uninsured. A computer-based incentivized experiment was conducted among 482 volunteers. It was found that the behavior of those who wanted to but could not buy insurance policy was different among participants with different levels of self-assessed memory skills. Also, risk attitude of a decision maker mainly affected behavior of those participants who were willing to buy insurance but could not do it. On average more risk averse players made more effort to avoid loss than less risk averse participants. In some of the scenarios those who were willing to buy insurance policy were more risk averse than those who did not want to buy it. Participants who were insured on average had made less effort to avoid loss (measured by time spent for studying words) than those who were not insured.