Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
We investigate how consumers choose insurance contracts when using a measure of decision quality based on individual risk preferences. For this, we use a laboratory experiment with a sequential design. First, subjects face insurance choices. Then, we elicit risk preferences. Allowing for different latent decision making theories, i.e. Cumulative Prospect Theory and Expected Utility Theory, we find that the vast majority are Cumulative Prospect Theory types. Analyzing whether subjects choose contracts consistent with their risk preferences, we find that about 14% of all participants show inconsistent behavior and low decision quality. Yet, the majority shows consistent behavior and good decision quality. Our results suggest that one explanation for inconsistent choices is the application of heuristics.