Making Decisions About Liability And Insurance: A Special Issue of the Journal of Risk and Uncertainty
Colin F. Camerer, Howard Kunreuther
Springer Science & Business Media, Dec 6, 2012 - Business & Economics - 139 pages
Two related trends have created novel challenges for managing risk in the United States. The first trend is a series of dramatic changes in liability law as tort law has expanded to assign liability to defendants for reasons other than negligence. The unpredictability of future costs induced by changes in tort law may be partly responsible for the second major trend known as the `liability crisis' - the disappearance of liability protection in markets for particularly unpredictable risks.
This book examines decisions people make about insurance and liability. An understanding of such decision making may help explain why the insurance crisis resulted from the new interpretations of tort law and what to do about it. The articles cover three kinds of decisions: consumer decisions to purchase insurance; insurer decisions about coverage they offer; and the decisions of the public about the liability rules they prefer, which are reflected in legislation and regulation. For each of these three kinds of decisions, normative theories such as expected utility theory can be used as benchmarks against which actual decisions are judged.
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actuaries ambiguity averse assessing auction auto insurance Baron behavior bimodality bodily injury choices claims Coefficient of variation Coefficient standard error Colin Camerer compensation consumers context contingent valuation coverage deductible deterrence earthquake Economic effects Ellsberg paradox estimates example expected loss expected value experiment experimental firms Fischhoff hazards Howard Kunreuther incentive individuals influence insurance companies insurance decisions insurance policy insurance pricing Journal of Risk judgments Kahneman laboratory loss aversion Loss/exposure variable t-2 low-probability risks Management manual rates mean in product Meszaros Panel penalties pill premium rate pricing decisions probability of loss product group product liability Prospect Theory purchase question questionnaire rebate red chip reference point reinsurance responses risk ambiguity risk averse risk taking risk-ambiguity aversion role rounds sample scenarios Shapira Skewness Slovic specific studies subjects suggest tasks theory tort transaction analysis Tversky underwriters vaccine Variance X mean Vickrey auction Viscusi white chips