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Armantier, Olivier
, Foncel, Jérôme and Treich, Nicolas
(2023)
Insurance and portfolio decisions: Two sides of the same coin?
Journal of Financial Economics, vol.148 (n°3).
pp. 201-219.
This is the latest version of this item.
Abstract
We study insurance and portfolio decisions, two opposite risk retention tradeoffs. Using household level data, we identify the first joint determinants (e.g. subjective expectations, risk attitude) and frictions (e.g. liquidity constraints, financial literacy) in the literature. We also find key differences between the two decisions. Notably, contrary to economic intuition, risky asset holding and insurance coverage both increase with wealth. We show that this apparent puzzle is driven in part by a specific behavioral pattern (the poor invest too conservatively, while the rich over-insure), and can be explained by two factors: regret avoidance and nonperformance risk.
| Item Type: | Article |
|---|---|
| Language: | English |
| Date: | June 2023 |
| Refereed: | Yes |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 07 Apr 2023 13:20 |
| Last Modified: | 28 Aug 2023 07:36 |
| OAI Identifier: | oai:tse-fr.eu:128023 |
| URI: | https://publications.ut-capitole.fr/id/eprint/47581 |
Available Versions of this Item
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Insurance and Portfolio Decisions: Two Sides of the Same Coin? (deposited 13 Apr 2023 07:04)
- Insurance and portfolio decisions: Two sides of the same coin? (deposited 07 Apr 2023 13:20) [Currently Displayed]
