Reference

David Alary, Christian Gollier, and Nicolas Treich, “The Effect of Ambiguity Aversion on Insurance and Self-protection”, The Economic Journal, vol. 123, n. 573, December 2013, pp. 1188–1202.

Abstract

In this paper, we show that ambiguity aversion always raises the demand for self-insurance and the insurance coverage, but may de- crease the demand for self-protection. We also characterize the opti- mal insurance design under ambiguity aversion, and exhibit a case in which the straight deductible contract is optimal as in the expected utility model.

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