Details

Autor(en) / Beteiligte

• Hillebrandt, Marc-André

Titel

Revisiting the Impact of Contract Nonperformance Risk on Individuals’ Willingness to Pay—Experimental Evidence

Ist Teil von

• Journal of insurance issues, 2023-10, Vol.46 (2), p.147-174

Ort / Verlag

Western Risk and Insurance Association

Erscheinungsjahr

2023

Link zum Volltext

Quelle

EBSCOhost Business Source Ultimate

Beschreibungen/Notizen

• An insurance contract may be nonperforming, resulting in a situation in which the insured might be worse off than without insurance since also losing the premium. This study revisits how contract nonperformance risk influences individuals’ willingness to pay (WTP) for insurance contracts. In an incentive-compatible laboratory experiment, subjects state their maximum WTP for different insurance contracts, which differ only in their inherent nonperformance risk. While the median WTP for no-default contracts is above the actuarially fair premium, both the mere existence of default risk and an increase in default risk decrease participants’ median WTP below the actuarially fair premia.