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Armantier, Olivier
, Foncel, Jérôme and Treich, Nicolas
(2023)
Insurance and Portfolio Decisions: Two Sides of the Same Coin?
TSE Working Paper, n. 23-1425
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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 expecta-tions, 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: | Monograph (Working Paper) |
|---|---|
| Language: | English |
| Date: | April 2023 |
| JEL Classification: | C3 - Multiple or Simultaneous Equation Models D14 - Personal Finance D81 - Criteria for Decision-Making under Risk and Uncertainty |
| Subjects: | B- ECONOMIE ET FINANCE |
| Divisions: | TSE-R (Toulouse) |
| Site: | UT1 |
| Date Deposited: | 13 Apr 2023 07:04 |
| Last Modified: | 28 Aug 2023 07:36 |
| OAI Identifier: | oai:tse-fr.eu:128034 |
| URI: | https://publications.ut-capitole.fr/id/eprint/47753 |
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- Insurance and Portfolio Decisions: Two Sides of the Same Coin? (deposited 13 Apr 2023 07:04) [Currently Displayed]
