A Theory of Rational Demand for Index Insurance

被引：150
|
作者：
Clarke, Daniel J. [1 ]
机构：
[1] World Bank, 2121 Penn Ave NW, Washington, DC 20433 USA
来源：
AMERICAN ECONOMIC JOURNAL-MICROECONOMICS | 2016年 / 8卷 / 01期
基金：
英国经济与社会研究理事会;
关键词：
RAINFALL INSURANCE; RISK-AVERSION; INDIA; CREDIT;
D O I：
10.1257/mic.20140103
中图分类号：
F [经济];
学科分类号：
02 ;
摘要：
Rational demand for index insurance products is shown to be fundamentally different to that for indemnity insurance products due to the presence of basis risk. In particular, optimal demand is zero for infinitely risk-averse individuals, and is nonmonotonic in risk aversion, wealth, and price. For a given belief, upper bounds are derived for the optimal demand from risk-averse and decreasing absolute risk-averse decision makers. A simple ratio for monitoring basis risk is presented and applied to explain the low level of demand for consumer hedging instruments as a rational response to deadweight costs and basis risk.
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页码：283 / 306
页数：24
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