$12.03 buying more than $14.12 It might be harsh to describe consumers as stupid, but there is compelling evidence to suggest that such a description might be applicable – at least as far as insurance is involved. A study by four economists from Penn State, Temple University, and the University of Pennsylvania considered how much […]

$12.03 buying more than $14.12 It might be harsh to describe consumers as stupid, but there is compelling evidence to suggest that such a description might be applicable – at least as far as insurance is involved.A study by four economists from Penn State, Temple University, and the University of Pennsylvania considered how much consumers were willing to pay for $100,000 travel insurance cover for a trip to Thailand. Participants in the study were offered: Option 1 – cover for death caused by terrorism Option 2 – cover for death by any cause, including terrorism  The findings revealed staggering irrationality, as follows: Option 1 – an average of $14.12 Option 2 – an average of $12.03  Participants were willing to pay more for cover that addressed only terrorism than they were for cover that addressed all potential causes of death, including terrorism. This finding was very similar to that of…