Individual Property Risk Management
This paper reviews household property risk management and estimates normatively optimal choice under theoretical assumptions. Although risk retention limits are common in the financial planning industry, estimates of optimal risk retention that include both financial and human wealth far exceed limi...
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| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Wiley
2010-01-01
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| Series: | Journal of Probability and Statistics |
| Online Access: | http://dx.doi.org/10.1155/2010/805309 |
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| _version_ | 1832564888940052480 |
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| author | Michael S. Finke Eric Belasco Sandra J. Huston |
| author_facet | Michael S. Finke Eric Belasco Sandra J. Huston |
| author_sort | Michael S. Finke |
| collection | DOAJ |
| description | This paper reviews household property risk management and estimates normatively optimal choice under theoretical assumptions. Although risk retention limits are common in the financial planning industry, estimates of optimal risk retention that include both financial and human wealth far exceed limits commonly recommended. Households appear to frame property losses differently from other wealth losses leading to wealth-reducing, excess risk transfer. Possible theoretical explanations for excess sensitivity to loss are reviewed. Differences between observed and optimal risk management imply a large potential gain from improved choice. |
| format | Article |
| id | doaj-art-5f96789eb09c41f59a0089a64cb7a9a2 |
| institution | Kabale University |
| issn | 1687-952X 1687-9538 |
| language | English |
| publishDate | 2010-01-01 |
| publisher | Wiley |
| record_format | Article |
| series | Journal of Probability and Statistics |
| spelling | doaj-art-5f96789eb09c41f59a0089a64cb7a9a22025-02-03T01:09:51ZengWileyJournal of Probability and Statistics1687-952X1687-95382010-01-01201010.1155/2010/805309805309Individual Property Risk ManagementMichael S. Finke0Eric Belasco1Sandra J. Huston2Division of Personal Financial Planning, Texas Tech University, Lubbock, TX 79409, USADepartment of Agricultural and Applied Economics, Texas Tech University, Lubbock, TX 79409, USADivision of Personal Financial Planning, Texas Tech University, Lubbock, TX 79409, USAThis paper reviews household property risk management and estimates normatively optimal choice under theoretical assumptions. Although risk retention limits are common in the financial planning industry, estimates of optimal risk retention that include both financial and human wealth far exceed limits commonly recommended. Households appear to frame property losses differently from other wealth losses leading to wealth-reducing, excess risk transfer. Possible theoretical explanations for excess sensitivity to loss are reviewed. Differences between observed and optimal risk management imply a large potential gain from improved choice.http://dx.doi.org/10.1155/2010/805309 |
| spellingShingle | Michael S. Finke Eric Belasco Sandra J. Huston Individual Property Risk Management Journal of Probability and Statistics |
| title | Individual Property Risk Management |
| title_full | Individual Property Risk Management |
| title_fullStr | Individual Property Risk Management |
| title_full_unstemmed | Individual Property Risk Management |
| title_short | Individual Property Risk Management |
| title_sort | individual property risk management |
| url | http://dx.doi.org/10.1155/2010/805309 |
| work_keys_str_mv | AT michaelsfinke individualpropertyriskmanagement AT ericbelasco individualpropertyriskmanagement AT sandrajhuston individualpropertyriskmanagement |