Choices at various levels of uncertainty: An experimental test of the restated diversification theorem
2006 (English)In: Journal of Risk and Uncertainty, ISSN 0895-5646, E-ISSN 1573-0476, Vol. 33, no 3, 183-196 p.Article in journal (Refereed) Published
Our "Restated diversification theorem" (Skogh and Wu, 2005) says that risk-averse agents may pool risks efficiently without assignment of subjective probabilities to outcomes, also at genuine uncertainty. It suffices that the agents presume that they face equal risks. Here, the theorem is tested in an experiment where the probability of loss, and the information about this probability, varies. The result supports our theorem. Moreover, it tentatively supports an evolutionary theory of the insurance industry-starting with mutual pooling at uncertainty, turning into insurance priced ex ante when actuarial information is available. © Springer Science + Business Media, LLC 2006.
Place, publisher, year, edition, pages
Springer Science+Business Media B.V., 2006. Vol. 33, no 3, 183-196 p.
Loss sharing . Insurance . Risk . Ambiguity . Uncertainty . Experiment
Engineering and Technology
IdentifiersURN: urn:nbn:se:liu:diva-43412DOI: 10.1007/s11166-006-0332-0Local ID: 73771OAI: oai:DiVA.org:liu-43412DiVA: diva2:264271