nep-ias New Economics Papers
on Insurance Economics
Issue of 2006‒01‒29
one paper chosen by
Soumitra K Mallick
Indian Institute of Social Welfare and Bussiness Management

  1. Health Values, Preference Inconsistency, and Insurance Demand By Matthias Wrede

  1. By: Matthias Wrede
    Abstract: Several empirical studies provide evidence that their actual health state affects people’s attitudes towards health and medical care in hypothetical health states. In the tradition of behavioural economics this paper considers the actual health state as a point of reference and builds a model for studying the implications of this phenomenon on health insurance and on demand for medical care. It considers the insurance demand of different types of agents: naive individuals, individuals who are able to commit to medical care demand and sophisticated individuals. Furthermore, it raises the question of whether inconsistency of preferences reinforces or tones down moral hazard problems.
    Keywords: health insurance, medical care, health state, behavioural economics, prospect theory, time inconsistency
    JEL: D82 D91 G22 I11
    Date: 2005

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