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


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.