{"id":{"repo_id":"cape-town","oai_identifier":"oai:open.uct.ac.za:11427/10215"},"canonical_url":"https://search.dev.ndltd.org/etd/cape-town/oai:open.uct.ac.za:11427/10215","repository":{"repo_id":"cape-town","name":"University of Cape Town","base_url":"https://open.uct.ac.za/oai/request"},"display":{"title":"Ambiguity, ambiguity aversion and the coverage of uncertain risks : the case of the insurer","abstract":"Ambiguity aversion is defined as an aversion to any mean-preserving spread in the probability space. Using the Smooth Ambiguity Model proposed by Klibanoff, Marinacci and Mukerji (2005), we show that ambiguity aversion results in a reduction in the proportion of insurance coverage offered by an insurer. This is because an ambiguity averse insurer calculates expected utilities by using a 'distorted' probability that raises the marginal disutility of wealth in the loss state. We also show that, in general, an ambiguity averse insurer will not offer more coverage to wealthier agents. Wealthier agents enjoy more coverage when the subjective average probability of loss is significantly high. Our results go a long way in reconciling theoretical models of insurance under ambiguity with the empirical finding that insurers are sensitive to ambiguity.","abstract_html":"Ambiguity aversion is defined as an aversion to any mean-preserving spread in the probability space. Using the Smooth Ambiguity Model proposed by Klibanoff, Marinacci and Mukerji (2005), we show that ambiguity aversion results in a reduction in the proportion of insurance coverage offered by an insurer. This is because an ambiguity averse insurer calculates expected utilities by using a 'distorted' probability that raises the marginal disutility of wealth in the loss state. We also show that, in general, an ambiguity averse insurer will not offer more coverage to wealthier agents. Wealthier agents enjoy more coverage when the subjective average probability of loss is significantly high. Our results go a long way in reconciling theoretical models of insurance under ambiguity with the empirical finding that insurers are sensitive to ambiguity.","abstract_has_math":false,"creators":["Chelwa, Grieve"],"institution":"School of Economics","degree_name":null,"degree_level":null,"degree_discipline":null,"degree_department":null,"school":null,"contributors":[],"advisors":["Pellicer, Miquel"],"committee_chairs":[],"committee_members":[],"year":2011,"date_issued":"2011","date_published":"2011","updated_at":"2026-07-22T22:22:50Z","subjects":[],"languages":["eng"],"rights":[],"rights_urls":[],"identifier_entries":[]},"links":{"outbound_url":"http://hdl.handle.net/11427/10215","outbound_label":"Handle","outbound_source":"dc:identifier.uri"},"metadata_groups":[{"id":"people","label":"People","entries":[{"key":"dc:contributor.advisor","label":"Advisor","values":["Pellicer, Miquel"]},{"key":"dc:creator","label":"Author","values":["Chelwa, Grieve"]}]},{"id":"academic_context","label":"Academic Context","entries":[{"key":"dc:date.accessioned","label":"Dc Date Accessioned","values":["2014-12-27T14:06:07Z"]},{"key":"dc:date.available","label":"Dc Date Available","values":["2014-12-27T14:06:07Z"]},{"key":"dc:date.issued","label":"Date","values":["2011"]},{"key":"dc:publisher.department","label":"Dc Publisher Department","values":["School of Economics"]},{"key":"dc:publisher.institution","label":"Dc Publisher Institution","values":["University of Cape Town"]},{"key":"dc:type","label":"Dc Type","values":["Master Thesis"]},{"key":"dc:type.qualificationlevel","label":"Dc Type Qualificationlevel","values":["Masters"]},{"key":"dc:type.qualificationname","label":"Dc Type Qualificationname","values":["MCom"]}]},{"id":"language_rights","label":"Language and Rights","entries":[{"key":"dc:language.iso","label":"Language (ISO)","values":["eng"]}]},{"id":"identifiers","label":"Identifiers","entries":[{"key":"dc:identifier.uri","label":"Identifier URI","values":["http://hdl.handle.net/11427/10215"]}]},{"id":"additional","label":"Additional Metadata","entries":[{"key":"dc:description.abstract","label":"Abstract","values":["Ambiguity aversion is defined as an aversion to any mean-preserving spread in the probability space. Using the Smooth Ambiguity Model proposed by Klibanoff, Marinacci and Mukerji (2005), we show that ambiguity aversion results in a reduction in the proportion of insurance coverage offered by an insurer. This is because an ambiguity averse insurer calculates expected utilities by using a 'distorted' probability that raises the marginal disutility of wealth in the loss state. We also show that, in general, an ambiguity averse insurer will not offer more coverage to wealthier agents. Wealthier agents enjoy more coverage when the subjective average probability of loss is significantly high. Our results go a long way in reconciling theoretical models of insurance under ambiguity with the empirical finding that insurers are sensitive to ambiguity."]},{"key":"dc:title","label":"Title","values":["Ambiguity, ambiguity aversion and the coverage of uncertain risks : the case of the insurer"]}]}],"canonical_facts":{"dc:contributor.advisor":["Pellicer, Miquel"],"dc:creator":["Chelwa, Grieve"],"dc:date.accessioned":["2014-12-27T14:06:07Z"],"dc:date.available":["2014-12-27T14:06:07Z"],"dc:date.issued":["2011"],"dc:description.abstract":["Ambiguity aversion is defined as an aversion to any mean-preserving spread in the probability space. Using the Smooth Ambiguity Model proposed by Klibanoff, Marinacci and Mukerji (2005), we show that ambiguity aversion results in a reduction in the proportion of insurance coverage offered by an insurer. This is because an ambiguity averse insurer calculates expected utilities by using a 'distorted' probability that raises the marginal disutility of wealth in the loss state. We also show that, in general, an ambiguity averse insurer will not offer more coverage to wealthier agents. Wealthier agents enjoy more coverage when the subjective average probability of loss is significantly high. Our results go a long way in reconciling theoretical models of insurance under ambiguity with the empirical finding that insurers are sensitive to ambiguity."],"dc:identifier.uri":["http://hdl.handle.net/11427/10215"],"dc:language.iso":["eng"],"dc:publisher.department":["School of Economics"],"dc:publisher.institution":["University of Cape Town"],"dc:title":["Ambiguity, ambiguity aversion and the coverage of uncertain risks : the case of the insurer"],"dc:type":["Master Thesis"],"dc:type.qualificationlevel":["Masters"],"dc:type.qualificationname":["MCom"]},"updated_at":"2026-07-22T22:22:50Z"}