TY  - JOUR
AU  - Bhattacharya,Jay
AU  - Goldman,Dana
AU  - Sood,Neeraj
TI  - Market Evidence of Misperceived Prices and Mistaken Mortality Risks
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9863
PY  - 2003
Y2  - July 2003
UR  - http://www.nber.org/papers/w9863
L1  - http://www.nber.org/papers/w9863.pdf
N1  - Author contact info:
Jay Bhattacharya
117 Encina Commons
Center for Primary Care
and Outcomes Research
Stanford University
Stanford, CA  94305-6019
Tel: 650/736-0404
Fax: 650/723-1919
E-Mail: jay@stanford.edu

Dana Goldman
Schaeffer Center for Health Policy and Economics
University of Southern California
 3335 S. Figueroa St, Unit A
 Los Angeles, CA 90089-7273
Tel: (213) 821-7948
Fax: (213) 740-3460
E-Mail: dana.goldman@usc.edu

Neeraj Sood
Department of Clinical Pharmacy
USC School of Pharmacy
1985 Zonal Avenue
Los Angeles, CA 90033
Tel: 310/393-0411
Fax: 310/260-8156
E-Mail: nsood@usc.edu
AB  - We construct and implement a test of rational consumer behavior in a highstakes financial market. In particular, we test whether consumers make systematic mistakes in perceiving their mortality risks. We implement this test using data from secondary life insurance markets where consumers with a lifethreatening illness sell their life insurance policies to firms in return for an up-front payment. We compare predictions from two models: one with consumers who correctly perceive their mortality risk, and one with consumers who are misguided about their life expectancy, and find that our data are most consistent with the predictions made by the second model.
ER  -