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Publications
Publications
  • May 2014
  • Article
  • American Economic Review: Papers and Proceedings

Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment

By: Shawn A. Cole, Daniel Stein and Jeremy Tobacman
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Abstract

This paper estimates how experimentally-manipulated experiences with a novel financial product, rainfall index insurance, affect subsequent insurance demand. Using a seven-year panel, we develop three main findings. First, recent experience matters for demand, consistent with overinference from small samples. Second, spillovers also matter, in the sense that the recent payout experience of village co-residents affects insurance demand about as much as one's own recent payout experience. Third, the spillover effect decays as time passes while the effect of one's own experience does not. We discuss implications of this analysis for commercial sustainability of this complicated but promising risk management technology.

Citation

Cole, Shawn A., Daniel Stein, and Jeremy Tobacman. "Dynamics of Demand for Index Insurance: Evidence from a Long-Run Field Experiment." American Economic Review: Papers and Proceedings 104, no. 5 (May 2014): 284–290.
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About The Author

Shawn A. Cole

Finance
→More Publications

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    Engine No. 1: An Impact Investing Firm Engages with ExxonMobil

    By: Mark Kramer, Shawn Cole, Vikram S. Gandhi and T. Robert Zochowski
More from the Authors
  • What Do Impact Investors Do Differently? By: Shawn A. Cole, Leslie Jeng, Josh Lerner, Natalia Rigol and Benjamin N. Roth
  • Can Gambling Increase Savings? Empirical Evidence on Prize-Linked Savings Accounts By: Shawn A. Cole, Benjamin Iverson and Peter Tufano
  • Engine No. 1: An Impact Investing Firm Engages with ExxonMobil By: Mark Kramer, Shawn Cole, Vikram S. Gandhi and T. Robert Zochowski
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