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Overcoming Bias Commenter's avatar

yes, but why is it that consumers fail to buy enough catastrophic insurance, but overspend on insuring against common everyday eventualities.

Robin suggests that people don't like to contemplate bad things happening, so underinsure...

Perhaps it's just the marketing. Perhaps if you could buy $100 life-insusrance tokens at the checkout - good for 10 years, pay $10,000, standardised policy terms, then people wd buy more of it. It's all that going to see a financial advisor stuff that puts people off.

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Overcoming Bias Commenter's avatar

The explanation is pretty trivial: it lets the retailer extract some extra consumer surplus from people who don't care or don't have the math skills to figure out whether it's a waste of money.

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