1. Would I Lie to You? How the Interaction with Chatbots Changes Honesty Norms
Dishonest behavior in insurance markets creates inefficiencies worth billions of dollars globally: either directly through undetected insurance fraud or through measures preventing or detecting fraud. At the same time, we observe a vast substitution of humans with automated and autonomous chat systems. In this module, we’re asking whether this development driven by technological innovation as well as efficiency and engagement goals can backfire in that dishonest behavior becomes more prevalent in an interaction with a machine as opposed to a human?
2. Big Brother is Watching You! Perceived Demand-Side Costs of Telematics Contracts
With the rise of new technologies, insurance companies increasingly use telematics devices to monitor policyholders and to condition premiums on overserved behavior. This is common, for example, in health or auto insurance. Given that technology costs are low, and that observed behavior is a good signal of the individual’s risk type, telematics contracts increase efficiency because they eliminate information asymmetries; however, at the expense of customer privacy loss. In this module, we look at these demand-side costs by eliciting the dollar-value individuals assign to their personal data.
3. Will They Pay? The Impact of Contract Nonperformance Risk and Uncertainty on Insurance Demand
Public perception of insurance, fairly or not, is impacted by media coverage documenting cases of contract nonperformance – i.e., situations in which claims perceived as valid are not settled. Demand-side behavior is affected in a significant way by this. In this module, we look at the empirical evidence on the detrimental effects of perceived contract nonperformance risk on insurance demand and this differs between different types of insurance companies. A particular focus will be on a realistic setup, where probabilities for such events cannot be judged by the public.
4. The Value of the Golden Rule in Insurance: Mitigating Moral Hazard through Reciprocal Motives
The provision of most insurance products is rooted in the idea that a group of individuals mutually supports each other conditional on the realization of a predefined event. A core assumption for its functioning, however, is that insureds do not change their behavior once insured. The vast economic losses induced by moral hazard emphasize that this precondition is often violated in real markets. In this module, we look at non-standard ways to reduce moral hazard that exploit reciprocal motives of insureds, which can be embedded in the product design and used for framing claiming decisions of policyholders.