Affective decision-making is a strategic model of choice under risk and uncertainty where we posit two cognitive processes — the "rational" and the "emotional" process. Observed choice is the result of equilibirum in this intrapersonal game. As an example, we present applications of affective decision-making in insurance markets, where the risk perceptions of consumers are endogenous. We then d...

In this paper we investigate the effect of internationalization on home market performance using survey data and financial statement data of German insurance groups with property-liability business for the years 1999 through 2009. We develop a resource-based perspective and argue that strategic transformation is a major factor driving insurance groups’ internationalization, whereby successful i...

Disclosure of private medical information allows insurance companies to better predict medical expenditures. The premiums the companies charge the insured employees reflect these expenditures. This paper studies incentives of employees to disclose their medical information. I find that healthier employees prefer to disclose medical information that results in a disclosure plan having a lower pr...

Standard economic theory assumes individuals make decisions over a set of risky domains according to their own risk preferences which are stable across these decision contexts. The validity of this assumption of context-invariant risk preference has led to debate in the literature. We exploit latent class analysis to identify conditional on predicted and realized risk how heterogeneity in risk ...

This chapter focuses on institutional investors in the German financial markets. Institutional investors are specialized financial intermediaries who collect and manage funds on behalf of small investors toward specific objectives in terms of risk, return and maturity. The major types of institutional investors in Germany are insurance companies and investment funds. We will examine the nature ...

In the context of Sweden, we show that having a doctor in family raises preventive health investments throughout life cycle, improves physical health, and prolongs life. Two quasi-experimental research designs—medical school admission lotteries variation timing medical degrees—support causal interpretation these effects. A hypothetical policy would bring same behavior changes benefits to all Sw...

the conventional theory of adverse selection is not supported by most of the empirical works. these studies conclude that low-risk individuals demand more insurance services than high-risks. they refer to this situation as advantageous selection theory. this theory states that loss ratio of insureds may be lower than the population loss ratio while the conventional theory of adverse selection c...

In liability lawsuits (e.g., patent infringement), a plaintiff demands compensation from defendant, and the parties often negotiate settlement to avoid costly trial. Liability insurance creates bargaining leverage for defendant in this negotiation. We study characteristics of monopoly equilibrium contracts settings where effect is substantial source value insurance. Our results show that under ...