Assessing the Influence of Loss Framing on Insurance Consumption: A Game-Simulated Analysis Examining the Interplay with Socioeconomic Status

Abstract

Insurance plays a vital role in safeguarding individuals and businesses against various risks. Understanding the factors that influence insurance consumption is crucial for policymakers, insurance companies, and consumers alike. This thesis examines various aspects of insurance demand, focusing on understanding consumer behaviour related to insurance purchase decisions. Two studies were conducted in this work. The first study investigated the influence of wealth level on insurance consumption behavior using a game application. The results showed a nonlinear correlation between wealth and insurance consumption, increasing with increasing wealth and achieving a negative correlation after a threshold. The second study used a game-like application to determine how various behavioral characteristics, such as risk tolerance and loss framing, affect the decision to purchase insurance. The study focused on university students aged 18 to 25 with no income and working-class people aged 35 to 55. The results showed that the effect of loss framing on insurance consumption depends on the particular insurance policy, even if participants are aware of the loss. The studies explore data collection methods using surveys and game-like applications for studying insurance consumption behavior. Surveys can lead to dishonest responses, misunderstandings, and errors in interpretation. Gaming applications offer a more authentic and ecologically valid context, framing, capturing real-time behaviors and decision-making. These applications capture various aspects of insurance consumption behavior, such as decision-making processes, choices, and engagement patterns. The findings can be directly extrapolated or modeled to predict human behavior in real-life situations.