Huang, Rachel J; Shih, Pai-Ta; Tzeng, Larry Y - In: The Geneva Risk and Insurance Review 37 (2012) 2, pp. 258-284
This paper studies the optimal insurance contract under disappointment theory. We show that, when the individuals anticipate disappointment, there are two types of optimal insurance contract. The first type contains a deductible and a coinsurance above the deductible. We find that zero marginal...