How Biased Focus Can Explain Demand for Low Deductibles
Type
working paper
Date Issued
2020
Author(s)
Abstract (De)
We extend the Koszegi and Szeidl (2013) theory of focusing to capture uncertainty and explain deductible choices in the mandatory health insurance market of a representative sample of 15,485 Swiss citizens. We are particularly concerned with the implications of a mandatory health insurance market design that biases individuals to choose non-welfare maximizing options when they exhibit boundedly rational behavior. The bound is set by the focus on the size of the deductible instead of the premium and potential premium savings given higher deductibles. The characteristics of the market are particularly problematic as the fundamental product characteristics are prescribed by policy, pushing boundedly rational agents into non-welfare maximizing contracts that finance contracts of those choosing more optimally.
Language
English
HSG Classification
contribution to scientific community
Subject(s)
Division(s)
Eprints ID
261493