Insurance and portfolio decisions: Two sides of the same coin? - Archive ouverte HAL Accéder directement au contenu
Article Dans Une Revue Journal of Financial Economics Année : 2023

Insurance and portfolio decisions: Two sides of the same coin?

Résumé

We study insurance and portfolio decisions, two opposite risk retention tradeoffs. Using household level data, we identify the first joint determinants (e.g. subjective expectations, 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.

Dates et versions

hal-04062463 , version 1 (07-04-2023)

Identifiants

Citer

Olivier Armantier, Jérôme Foncel, Nicolas Treich. Insurance and portfolio decisions: Two sides of the same coin?. Journal of Financial Economics, 2023, 148 (3), pp.201-219. ⟨10.1016/j.jfineco.2023.03.003⟩. ⟨hal-04062463⟩
22 Consultations
0 Téléchargements

Altmetric

Partager

Gmail Facebook X LinkedIn More