Choice Under Uncertainty and the Demand for Health Insurance

by M. Susan Marquis, Martin R. Holmer


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This Note uses data on families' preferences for insurance to estimate and compare several models of decisionmaking under risk. By characterizing health insurance as a risky prospect and specifying structural models of prospect choice, the models estimated here differ from previous empirical models of health insurance demand in that they can be used to analyze choice among any number of arbitrarily defined plans. The ability to generalize beyond the number and type of plans present in the data is essential for policy analysis, because it permits the examination of policy options outside current experience.

This report is part of the RAND Corporation note series. The note was a product of the RAND Corporation from 1979 to 1993 that reported other outputs of sponsored research for general distribution.

The RAND Corporation is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.