TY  - JOUR
AU  - Krantz,David H.
AU  - Kunreuther,Howard
TI  - Goals and Plans in Protective Decision Making
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12446
PY  - 2006
Y2  - August 2006
UR  - http://www.nber.org/papers/w12446
L1  - http://www.nber.org/papers/w12446.pdf
N1  - Author contact info:
Howard Kunreuther
Operations and Information Management
The Wharton School
University of Pennsylvania
3730 Walnut Street, 500 JMHH
Philadelphia, PA 19104-6366
Tel: 215/898-4589
Fax: 215/573-2130
E-Mail: kunreuther@wharton.upenn.edu
AB  - Protective decisions are often puzzling. Among other anomalies, people insure against non-catastrophic events, underinsure against catastrophic risks, and allow extraneous factors to influence insurance purchases and other protective decisions. Neither expected utility theory nor prospect theory can explain these anomalies satisfactorily. We propose a constructed-choice model for general decision making. The model departs from utility theory and prospect theory in its treatment of multiple goals and it suggests several different ways in which context can affect choice. To apply this model to the above anomalies, we consider many different insurance-related goals, organized in a taxonomy, and we consider the effects of context on goals, resources, plans and decision rules. The paper concludes by suggesting some prescriptions for improving individual decision making with respect to protective measures.
ER  -