Abstract
This paper empirically investigates the influence of the ambiguity on the decision to buy hypothetical earthquake insurance and the relationship with individual characteristics based on MEU model. For that purpose, we develop the econometric model consistent with theoretical model derived from axioms. The main results of this paper are summarized as follows. First, respondent's preferences to the insurance with 1, 5, and 10% adjust risk are generally inconsistent with expected utility theory. Second, respondents demanded more than 10% reductions in premium to offset each adjust risk. Third, the ambiguity premium is larger in men who purchase earthquake insurance, have never received insurance payment, and distrust insurance companies than each correspondents, and increases with age, education level.
