Herd Behavior in the Insurance Market: A Survey

Abstract

We conduct a survey to examine herd behavior in the insurance market. Following prior studies on consumers’ use of information sources in their purchase decision-making processes we develop hypotheses that explore the relationship between selection of information sources and herd behavior among potential insurance buyers in the market. Our results strongly support contentions that insurance buyers are significantly influenced in their choices by recommendations from different information sources and they do use these as herd cues to infer insurance product quality when making their own purchase decisions. In particular, our findings suggest that potential insurance buyers are more likely to be influenced by collective intelligence than by insurance experts.