The chapter analyses behavioural biases and consumers’ decisions in relation to insurance and pensions.
The Behavioral Economics Guide is the “leading annual publication dedicated to behavioural economics and behavioural insights”. Open Evidence contributed to the 2022 edition with a chapter on behavioural biases and consumers’ decisions in relation to insurance and pensions. The authors provide a review of how behavioural science can help to explain how consumers behave in relation to insurance and pensions. More specifically, there is a focus on the behavioural biases and heuristics that may influence consumers and lead to suboptimal decision-making.
Based on this review, the article presents the findings of four behavioural research projects conducted by Open Evidence for the European Commission in the last three years. Three of these experiments were in the field of insurance (insurance in the digital environment, travel insurance in the COVID-19 context and natural catastrophe insurance). One was in the pensions field and explores the impact of a behaviourally informed pension tracker.
Through these examples, we demonstrate the value of employing a behavioural perspective in the evaluation and design of financial products, as well as the importance of conducting behavioural research.
The 2022 Behavioral Economics Guide can be downloaded here.