Please use this identifier to cite or link to this item:
Fels, Markus
Year of Publication: 
Series/Report no.: 
Beiträge zur Jahrestagung des Vereins für Socialpolitik 2019: 30 Jahre Mauerfall - Demokratie und Marktwirtschaft - Session: Economic Theory - Information and Uncertainty No. G01-V1
Some consumption opportunities, e.g. medical treatments, are both indivisible and only valuable in particular states of nature. The existence of such state-dependent indivisible consumption opportunities influences a person's risk attitudes. In general, people are not risk averse anymore even if utility from divisible consumption is concave. I propose a definition of insurance in the context of state-dependent preferences and investigate the different motives underlying insurance demand. The same reasons that rule out risk aversion turn out to be the basis of a desire to insure.This calls into question the standard approach that bases insurance demand on risk aversion with important implications for policy and research.
Risk Preferences
Indivisible Consumption
Insurance, Gambling
Document Type: 
Conference Paper

Files in This Item:

Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.