RATIONALITY OR 'GUT FEELINGS': WHAT DRIVES INSURANCE DEMAND?

This paper empirically investigates whether an individual’s emotional profile affects their insurance decision making. We conducted psychophysiological experiments on a sample of 645 individuals and found that emotional behaviours can improve the predictability of insurance demand. We propose two proxies for empirically measuring emotional behaviours: the emotional reaction in conditions of ambiguity and the fear of the unknown. We report evidence that these variables offer relevant contributions by increasing the predictive power of models for insurance demand, alongside traditional socioeconomic variables and psychographic traits. A selective role of emotional influence has been proven to exist when comparing different insurance policies, as well.