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Meeker D, Thompson C, Strylewicz G, et al. Use of Insurance Against a Small Loss as an Incentive Strategy. Decis Anal. 2015;12(3):122-129doi: 10.1287/deca.2015.0314.
Meeker, D., Thompson, C., Strylewicz, G., Knight, T. K., & Doctor, J. N. (2015). Use of Insurance Against a Small Loss as an Incentive Strategy. Decision analysis : a journal of the Institute for Operations Research and the Management Sciences, 12(3), 122-129. https://doi.org/10.1287/deca.2015.0314
Meeker, Daniella, et al. "Use of Insurance Against a Small Loss as an Incentive Strategy." Decision analysis : a journal of the Institute for Operations Research and the Management Sciences vol. 12,3 (2015): 122-129. doi: https://doi.org/10.1287/deca.2015.0314
Meeker D, Thompson C, Strylewicz G, Knight TK, Doctor JN. Use of Insurance Against a Small Loss as an Incentive Strategy. Decis Anal. 2015 Sep;12(3):122-129. doi: 10.1287/deca.2015.0314. Epub 2015 Apr 10. PMID: 26966422; PMCID: PMC4782799.
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Decis Anal. 2015 Sep;12(3):122-129. doi: 10.1287/deca.2015.0314. Epub 2015 Apr 10.

Use of Insurance Against a Small Loss as an Incentive Strategy.

Decision analysis : a journal of the Institute for Operations Research and the Management Sciences

Daniella Meeker, Christin Thompson, Greg Strylewicz, Tara K Knight, Jason N Doctor

Affiliations

  1. University of Southern California, Los Angeles, California 90033; and RAND Corporation, Santa Monica, California 90401.
  2. University of Southern California, Los Angeles, California 90033.
  3. University of Washington, Seattle, Washington 98195.

PMID: 26966422 PMCID: PMC4782799 DOI: 10.1287/deca.2015.0314

Abstract

The success of extended warranties and buyer protection plans suggests that insurance against a small loss has high decision utility. We explore whether the behavioral insight that people are highly averse to small chances of loss can be used to create a powerful incentive that has very low expected value. We compare decisions of individuals offered fixed payments for healthy choices to those offered insurance in exchange for healthy choices. We test the prediction that aversion to small losses will result in very high rates of health behavior uptake in exchange for insurance. Three hundred participants endowed with a $2 bonus randomly received one of two incentives for completing a scheduled health risk assessment: (1) an insurance guarantee against the 1% risk of losing the $2 bonus or (2) a fixed payment at the expected value of the insurance. Relative to the fixed payment condition, participants in the insurance intervention were 70% more likely to meet their health risk assessment appointment (

Keywords: behavioral economics; decision analysis; decision psychology; incentives; insurance; nonexpected utility

References

  1. JAMA. 2008 Dec 10;300(22):2631-7 - PubMed
  2. BMC Health Serv Res. 2008 Dec 23;8:272 - PubMed
  3. Health Serv Res. 2011 Oct;46(5):1663-74 - PubMed
  4. Am J Health Promot. 2012 Jan-Feb;26(3):184-8 - PubMed

Publication Types

Grant support