Description of the ‘Taxi driver’ experiment

The aim of the experiment we conducted was to test whether people are able to make rational decisions in situations of risks and to protect themselves against them. The experiment was carried out on fourth-year students of the Faculty of Economics at the University of Warsaw University, i.e. people who know and understand the basics of risk theory, and who should therefore be able to make the most accurate decisions. In our experiment we also tried to test the impact of asymmetric information in the insurance market on the behaviour of the insured, as well as the insurer. We also wanted to test the effect of adverse selection and moral hazard mechanisms on such a group.