tailieunhanh - Insurance Decision-Making and Market Behavior

Many associations let insurance companies and agents offer long-term care insurance to their members. These policies are like other types of long-term care insurance and typically require medical underwriting. Like employer- group policies, association policies usually give their members a choice of benefit options. In most cases, policies sold through associations must let members keep or convert their coverage after leaving the association. Be careful about joining an association just to buy any insurance coverage. Review your rights if the policy is terminated or canceled. . | Foundations and Trends in Microeconomics Vol. 1 No 2 2005 63-127 2006 H. Kunreuther and M. Pauly DOI 0700000002 new the essence of knowledge Insurance Decision-Making and Market Behavior Howard Kunreuther and Mark Pauly University of Pennsylvania Philadelphia PA 19104 USA Abstract Considerable evidence suggests that many people for whom insurance is worth purchasing do not have coverage and others who appear not to need financial protection against certain events actually have purchased coverage. There are certain types of events for which one might expect to see insurance widely marketed that are viewed today by insurers as uninsurable and there are other policies one might not expect to be successfully marketed that exist on a relatively large scale. In addition evidence suggests that cost-effective preventive measures are sometimes not rewarded by insurers in ways that could change their clients behavior. These examples reveal that insurance purchasing and marketing activities do not always produce results that are in the best interest of individuals at risk. Insurance Decision-Making and Market Behavior discusses such behavior with the intent of categorizing these insurance anomalies . It represents a first step in constructing a theory of insurance decision-making to explain behavior that does not conform to standard economic models of choice and decision-making. Finally the authors propose a set of prescriptive solutions for improving insurance decision-making. 1 Introduction Economists view insurance markets as a special case of markets for contingent claims based on the state-preference approach developed by Arrow 1953 and Debreu 1953 . A contingent claim is a formal contract between two parties whereby one of the parties the insured purchases a ticket from another party the insurer which can be redeemed for money if certain states of nature occur. The ticket is more commonly referred to as an insurance policy its cost is the insurance premium and .