Personality economics: An investigation of how personality develops and how it predicts decisions

<p>This thesis is the product of three research papers, of which each one forms a paper of this thesis. In thefirst paper, I study how people’s personality evolves and whether it is shaped by family dynamics,specifically by the sex of one’s siblings. Researchers developed a good understanding of the importanceof personality for people’s lives but know very little how this personality is shaped. The first paperinvestigates whether growing up with a sister instead of a brother might be a cause of different personalitydevelopment. In the second paper, I study two specific personality traits, locus of control and risktolerance, as predictors of decisions under risk. Although we know risk is a crucial part of our lives, we stillhave not determined how to define and measure risk attitudes properly. The second paper delves deeperinto this topic and shows how risk tolerance and locus of control predict risky decisions in an experimentand in real-world choices and gives some additional insight into the measurement of risk attitudes. In thispaper I also studied other personality traits, which turned out to have no important role with regards todecisions under risk. In the third and last paper, I study property insurance decisions with data collectedin an experiment. I designed and coded the experiment and collected this data partially in a computer laband partially online. This project investigates what behavioral and financial factors influence propertyinsurance decisions, especially the choice to insure with fixed-price long-term contracts.</p>

Personality economics: An investigation of how personality develops and how it predicts decisions

<p>This thesis is the product of three research papers, of which each one forms a paper of this thesis. In thefirst paper, I study how people’s personality evolves and whether it is shaped by family dynamics,specifically by the sex of one’s siblings. Researchers developed a good understanding of the importanceof personality for people’s lives but know very little how this personality is shaped. The first paperinvestigates whether growing up with a sister instead of a brother might be a cause of different personalitydevelopment. In the second paper, I study two specific personality traits, locus of control and risktolerance, as predictors of decisions under risk. Although we know risk is a crucial part of our lives, we stillhave not determined how to define and measure risk attitudes properly. The second paper delves deeperinto this topic and shows how risk tolerance and locus of control predict risky decisions in an experimentand in real-world choices and gives some additional insight into the measurement of risk attitudes. In thispaper I also studied other personality traits, which turned out to have no important role with regards todecisions under risk. In the third and last paper, I study property insurance decisions with data collectedin an experiment. I designed and coded the experiment and collected this data partially in a computer laband partially online. This project investigates what behavioral and financial factors influence propertyinsurance decisions, especially the choice to insure with fixed-price long-term contracts.</p>

Insurance decisions under nonperformance risk and ambiguity

An important societal problem is that people underinsure against risks that are unlikely or occur in the far future, such as natural disasters and long-term care needs. One explanation is that uncertainty about the risk of non-reimbursement induces ambiguity averse and risk prudent decision makers to take out less insurance. We set up an insurance experiment to test this explanation. Consistent with the theoretical predictions, we find that the demand for insurance is lower when the nonperformance risk is ambiguous than when it is known and when decision makers are risk prudent. We cannot attribute the lower take-up of insurance to our measure of ambiguity aversion, probably because ambiguity attitudes are richer than aversion alone.

Developing and Validating a Behavioural Model of Cyberinsurance Adoption

Business disruption from cyberattacks is a growing concern, yet cyberinsurance uptake remains low. Using an online behavioural economics experiment with 4800 participants across four EU countries, this study tests a predictive model of cyberinsurance adoption, incorporating elements of Protection Motivation Theory (PMT) and the Theory of Planned Behaviour (TPB) as well as factors in relation to risk propensity and price. During the experiment, participants were given the opportunity to purchase different cybersecurity measures and cyberinsurance products before performing an online task. Participants likelihood of suffering a cyberattack was dependent upon their adoption of cybersecurity measures and their behaviour during the online task. The consequences of any attack were dependent upon the participants insurance decisions. Structural equation modelling was applied and the model was further developed to include elements of the wider security ecosystem. The final model shows that all TPB factors, and response efficacy from the PMT, positively predicted adoption of premium cyberinsurance. Interestingly, adoption of cybersecurity measures was associated with safer behaviour online, contrary to concerns of “moral hazard”. The findings highlight the need to consider the larger cybersecurity ecosystem when designing interventions to increase adoption of cyberinsurance and/or promote more secure online behaviour.

User Interactions With Health Insurance Decision Aids: User Study With Retrospective Think-Aloud Interviews (Preprint)

BACKGROUND Two barriers to effective enrollment decisions are low health insurance literacy and lack of knowledge about how to choose a plan. To remedy these issues, digital decision aids have been used to increase the knowledge of plan options and to guide the decision process. Previous research has shown that the way information is presented in a decision aid can impact consumer choice, and existing health insurance decision aids vary in their design, content, and layout. Commercial virtual benefits counselors (VBCs) are digital decision aids that provide decision support by mimicking the guidance provided by an in-person human resources (HR) counselor, whereas more traditional HR websites provide information that requires self-directed navigation through the system. However, few studies have compared how decision processes are impacted by these different methods of providing information. OBJECTIVE This study aims to examine how individuals interact with two different types of health insurance decision aids (<i>guided</i> VBCs that mimic conversations with a real HR counselor and <i>self-directed</i> HR websites that provide a broad range of detailed information) to make employer-provided health insurance decisions. METHODS In total, 16 employees from a local state university completed a user study in which they made mock employer-provided health insurance decisions using 1 of 2 systems (VBC vs HR website). Participants took part in a retrospective think-aloud interview, cued using eye-tracking data to understand decision aid interactions. In addition, pre- and postexperiment measures of literacy and knowledge and decision conflict and usability of the system were also examined. RESULTS Both the VBC and HR website had positive benefits for health insurance knowledge and literacy. Previous health insurance knowledge also impacted how individuals used decision aids. Individuals who scored lower on the pre-experiment knowledge test focused on different decision factors and were more conflicted about their final enrollment decisions than those with higher knowledge test scores. Although both decision aids resulted in similar changes in the Health Insurance Literacy Measure and knowledge test scores, perceived usability differed. Website navigation was not intuitive, and it took longer to locate information, although users appreciated that it had more details; the VBC website was easier to use but had limited information. Lower knowledge participants, in particular, found the website to be less useful and harder to use than those with higher health insurance knowledge. Finally, out-of-pocket cost estimation tools can lead to confusion when they do not highlight the factors that contribute to the cost estimate. CONCLUSIONS This study showed that health insurance decision aids help individuals improve their confidence in selecting and using health insurance plans. However, previous health insurance knowledge plays a significant role in how users interact with and benefit from decision aids, even when information is presented in different formats.