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Type: Theses
Title: Health or wealth: decision making in health insurance
Author: Gamble, Hamish William
Issue Date: 2016
School/Discipline: School of Economics
Abstract: In this thesis we investigate whether health insurance decisions can be explained by loss aversion. We use a model of reference dependent preferences as developed by Koszegi and Rabin (2006) to show that under loss aversion there are different maximum willingness to pay for private health insurance. We do not endogenise the reference point. Instead we attempt to alter the reference point through framing in a laboratory setting, in a manner which is consistent with the original Tversky and Kahneman (1981) formulation of prospect theory. We find that the framing effect did not result in a difference between the proportion of subjects who purchased private health insurance. We do find that subjects make decisions closer to that of an expected utility maximiser in the treatment which is framed such that the reference point is consistent with having private health insurance, where there is a loss in health and a gain in wealth from giving up the insurance. Our result highlights the importance of framing for governments or policy makers who are attempting to influence individuals behaviour.
Advisor: Masson, Virginie
Bayer, Ralph-Christopher
Dissertation Note: Thesis (M.Phil.) -- University of Adelaide, School of Economics, 2016.
Keywords: prospect theory
health insurance
loss aversion
Provenance: This electronic version is made publicly available by the University of Adelaide in accordance with its open access policy for student theses. Copyright in this thesis remains with the author. This thesis may incorporate third party material which has been used by the author pursuant to Fair Dealing exceptions. If you are the owner of any included third party copyright material you wish to be removed from this electronic version, please complete the take down form located at:
DOI: 10.4225/55/58c1e90251b10
Appears in Collections:Research Theses

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