Quotation Kremslehner, Robert. 2012. Optimal Insurance Policies for Regret Averse Policyholders. CEAR/MRIC Behavioral Insurance Workshop, Munich, Deutschland, 10.12.-11.12..




We derive the optimal structure of an insurance contract for regret averse policyholders. We show that the optimal contract always involves coinsurance, even if insurance is fairly priced. A deductible is optimal either if insurance is priced with a loading or if regret aversion dominates risk aversion. Put differently, deductibles can be optimal for fairly priced insurance contracts. Last, we show that regret aversion reduces the demand for insurance if insurance is fairly priced, whereas the effect of regret aversion on insurance demand is ambiguous if insurance is priced with high loadings.


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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Paper presented at an academic conference or symposium
Language English
Title Optimal Insurance Policies for Regret Averse Policyholders
Event CEAR/MRIC Behavioral Insurance Workshop
Year 2012
Date 10.12.-11.12.
Country Germany
Location Munich


Kremslehner, Robert (Former researcher)
Institute for Finance, Banking and Insurance IN (Details)
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