Depressed demand for crop insurance contracts, and a rationale based on third generation Prospect Theory
When actuarially fair insurance for a major risk is available then standard economic theory
posits that those subject to the risk should insure. In agriculture, it is common for producers
to decline contract offers where presubsidy premiums just cover average losses and
subsidies are substantial. This paper seeks to shed light on why demand is curtailed. In a
mail survey of US corn and soybean producers we solicited Willingness to Pay (WTP) for
actuarially fair insurance at different coverage levels. We find demand to be so low that …
posits that those subject to the risk should insure. In agriculture, it is common for producers
to decline contract offers where presubsidy premiums just cover average losses and
subsidies are substantial. This paper seeks to shed light on why demand is curtailed. In a
mail survey of US corn and soybean producers we solicited Willingness to Pay (WTP) for
actuarially fair insurance at different coverage levels. We find demand to be so low that …
Depressed demand for crop insurance contracts, and a rationale based on Third generation Prospect Theory.
FHL Feng HongLi, DXD Du XiaoDong, DA Hennessy - 2020 - cabidigitallibrary.org
When actuarially fair insurance for a major risk is available then standard economic theory
posits that those subject to the risk should insure. In agriculture, it is common for producers
to decline contract offers where presubsidy premiums just cover average losses and
subsidies are substantial. This paper seeks to shed light on why demand is curtailed. In a
mail survey of US corn and soybean producers we solicited Willingness to Pay (WTP) for
actuarially fair insurance at different coverage levels. We find demand to be so low that …
posits that those subject to the risk should insure. In agriculture, it is common for producers
to decline contract offers where presubsidy premiums just cover average losses and
subsidies are substantial. This paper seeks to shed light on why demand is curtailed. In a
mail survey of US corn and soybean producers we solicited Willingness to Pay (WTP) for
actuarially fair insurance at different coverage levels. We find demand to be so low that …