Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/242418 
Authors: 
Year of Publication: 
2021
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2021: Climate Economics
Publisher: 
ZBW - Leibniz Information Centre for Economics, Kiel, Hamburg
Abstract: 
I revisit the question of which motive underlies insurance demand. I draw on the literature of state-dependent utility and on the literature of imperfectly divisible consumption to argue that the general purpose of insurance is not a risk transfer, but meeting a conditional need. In this way, insurance aligns the risk in one's ftnancial endowment with the risk in one's ftnancial needs. This generalization extends the classical view of insurance. I show how this extension greatly simpliftes the generalization of classic results. I also discuss how the novel deftnition has implications for our discipline's research agenda and policy advice
Subjects: 
Insurance
Risk Aversion
State Dependence
Divisibility of Consumption
Risk Preferences
JEL: 
D01
D81
G22
Document Type: 
Conference Paper

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