Reference

David Alary, Christian Gollier, and Nicolas Treich, The Effect of Ambiguity Aversion on Insurance and Self-protection, The Economic Journal, vol. 123, n. 573, December 2013, pp. 1188–1202.

Abstract

In this paper, we show that ambiguity aversion always raises the demand for self-insurance and the insurance coverage, but may de- crease the demand for self-protection. We also characterize the opti- mal insurance design under ambiguity aversion, and exhibit a case in which the straight deductible contract is optimal as in the expected utility model.

Replaces

David Alary, Christian Gollier, and Nicolas Treich, The Effect of Ambiguity Aversion on Insurance and Self-protection, 2011, revised July 9, 2012.