We know that more choice is not always better. Former posts have emphasized this issue. Loewenstein et al. provide remarkable evidence of what happens with health insurance:
Our findings offer perhaps the strongest evidence to date that insurance reveal as much or more about consumer understanding than about actual health-related risk preferences. In this sense, our setting provides a rare opportunity to conduct a specification check on
the standard insurance demand model absent search frictions.
Our findings challenge the standard practice of inferring risk preferences from insurance choices and raise doubts about the welfare benefits of health reforms that expand consumer choice.If this is so, many books should be rewritten asap.
PS. G. Loeweinstein will be in Barcelona next week at Barcelona Jocs.
