Abstract
With the present work, we aim to mark a beginning line on the study of decision-making of potential consumers in the insurance sector, with the long-term purpose of defining the optimal cognitive processes to be undertaken when deciding whether to purchase insurance or not. Decision-making in conditions of uncertainty is influenced by the dual-self model doers/planner integrated with the hot–cold states and prospect utility function. Thus, we present a theoretical model of choice-making to evaluate the level of optimal self-control necessary to be exerted if the individual is either in the hot or in the cold state depending on the arousal. This theoretical choice-making model lays the ground for the decision journey by following the long-term utility and avoiding gross mistakes that could lead the consumer not to insure, when the odds suggest doing it, or vice versa, in situations when it would not be necessary.
Highlights
In the insurance sector, decision-making processes of consumers are configured as choices in conditions of risk and uncertainty
The insurance firm is responsible for the risk underwriting, calculating a premium to be paid by the customer for the insurance purchase based on a set of factors deemed relevant at a large scale of customers, ensuring profitability
Against the desired mechanism of self-control triggered by a cognitive “controller” over an affective “controlee” on decision-making, Blanchette and Richards (2010) reviewed a series of articles to identify the association between affective states and cognitive mechanisms, on the subjectivity of the direction of self-control
Summary
Decision-making processes of consumers are configured as choices in conditions of risk and uncertainty. Uncertainty from the acquirer’s view, the protagonist of the present article, is given by the subjectivity of each case (Ewald, 1991). It is expressed in terms of economic availability, risk disposition, trust in a competitive system of insurance (Abraham, 1985), among many other psychological factors, including the cognitive–affective interplay, that go far beyond the mere utility maximization (Kusev et al, 2017). In a complex system with several correlating factors in dynamic conditions, insurance decision-making is still characterized by the impossibility of defining, ex ante, with confidence by the prospect acquirer, the probability of events in the future. In a more practical description, tests can be made to assess
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