THE EFFECT OF RISK AVERSION ON THE DEMAND FOR LIFE INSURANCE: THE CASE OF IRANIAN LIFE INSURANCE MARKET

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MAHDAVI GHADIR; BAKHSHI FATEMEH SOGHRA

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Journal: IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH) Year:2012 | Volume:26 | Issue:4 (104) Page(s): 81-106

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Title

THE EFFECT OF RISK AVERSION ON THE DEMAND FOR LIFE INSURANCE: THE CASE OF IRANIAN LIFE INSURANCE MARKET

Author(s)

MAHDAVI GHADIR | BAKHSHI FATEMEH SOGHRA | Issue Writer Certificate

Keywords

LIFE INSURANCEQ2

RISK AVERSIONQ2

ADVANTAGEOUS SELECTIONQ2

AND ADVERSE SELECTIONQ2

Abstract

Conventional theories of demand under asymmetric information do not emphasize the effects of RISK AVERSION on insurance demand and do not consider negative correlation between RISK AVERSION and risk level. In this paper we focus on the effects of RISK AVERSION on LIFE INSURANCE demand.We use logistic regressions and apply dummy variables to show whether independent variables such as education, occupation, sex, age, income, wealth of household and other factors as criteria for RISK AVERSION, have significant effects on the demand for insurance. Our results show that age, gender, and employment don' t have any significant effect on the demand for LIFE INSURANCE. But education, marital status, care, health, premium levels, future uncertainty, income level and life expectancy have significant effects on the demand for LIFE INSURANCE in Iran.Since individuals with high level of RISK AVERSION purchase more LIFE INSURANCE than high risk individuals (lower risk averse individuals), we conclude that adverse selection doesn’t exist in Iranian LIFE INSURANCE market. In other words, the Iranian LIFE INSURANCE market faces an ADVANTAGEOUS SELECTION situation rather than adverse selection.

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APA: Copy

MAHDAVI, GHADIR, & BAKHSHI, FATEMEH SOGHRA. (2012). THE EFFECT OF RISK AVERSION ON THE DEMAND FOR LIFE INSURANCE: THE CASE OF IRANIAN LIFE INSURANCE MARKET. IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH), 26(4 (104)), 81-106. SID. https://sid.ir/paper/100922/en

Vancouver: Copy

MAHDAVI GHADIR, BAKHSHI FATEMEH SOGHRA. THE EFFECT OF RISK AVERSION ON THE DEMAND FOR LIFE INSURANCE: THE CASE OF IRANIAN LIFE INSURANCE MARKET. IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH)[Internet]. 2012;26(4 (104)):81-106. Available from: https://sid.ir/paper/100922/en

IEEE: Copy

GHADIR MAHDAVI, and FATEMEH SOGHRA BAKHSHI, “THE EFFECT OF RISK AVERSION ON THE DEMAND FOR LIFE INSURANCE: THE CASE OF IRANIAN LIFE INSURANCE MARKET,” IRANIAN JOURNAL OF INSURANCE RESEARCH (SANAAT-E-BIMEH), vol. 26, no. 4 (104), pp. 81–106, 2012, [Online]. Available: https://sid.ir/paper/100922/en

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