UTILITY, RISK AND DEMAND FOR INCOMPLETE INSURANCE: LAB EXPERIMENTS WITH GUATEMALAN CO-OPERATIVES

• 成果类型: Article
• 署名作者: McIntosh, Craig; Povel, Felix; Sadoulet, Elisabeth
• 署名单位: University of California System; University of California San Diego; University of California System; University of California Berkeley
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/uez005
• 发表日期: 2019
• 页码: 2581-2607
• 关键词: weather-index insurance; willingness-to-pay; expected utility; prospect-theory; dual theory; ambiguity; preferences; COMMITMENT; adoption; aversion

摘要

We play a series of incentivised laboratory games with risk-exposed co-operativised Guatemalan coffee farmers to understand the demand for index-based rainfall insurance. We estimate an explicit utility curve for every player and hence predict expected utility demand under counterfactual scenarios. Using these estimates, we provide a precise money-metric decomposition of the extent to which the low observed demand for index insurance is driven by expected utility theory, or by behavioural issues arising from a prospect-style utility structure. Our results suggest that consumers value probabilistic insurance using a prospect-style utility function that is concave both in probabilities and in income.