Title: The reciprocal spillover effects of informal risk sharing on formal insurance
Speaker: Senran Lin
Date: Tuesday, 15th June 2021
Time: 11:30am – 1:00pm (Beijing time)
Location：Room 311 Hong Yuan Building
Abstract:
People are sometimes reluctant to purchase insurance. We show that this could be through a reciprocal motivation channel, i.e., individuals have a tendency to match behavioral kindness (unkindness) to kindness (unkindness) from others.
Especially, informal risk-sharing in one market can influence insurance purchase decision in another market. We explore this channel in the form of Dufwenberg & Kirchsteiger (2004) and derive testable hypotheses.
To test the validity of our theory, we design an experiment in which two players need to make risk-sharing decisions simultaneously in two independent markets. Moreover, we allow one player (i.e. the insured) to purchase formal insurance in one market beforehand. Under such an experimental design, testing our hypotheses allows us to make a clear-cut distinction between intention-based reciprocity and other behavioral channels, such as altruism and inequality aversion.
